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Talking to Madoff

Wednesday, March 02, 2011

Disgraced financier Bernard Madoff passes a police barricade as he arrives at court on March 12, 2009 in New York City (Getty)

Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on The Brian Lehrer ShowSteve Fishman, contributor to New York Magazine, talked about his exclusive interviews with imprisoned Bernard Madoff.

Almost two years into a jail sentence scheduled to last a century and a half, Bernie Madoff is giving phone interviews.

The reviled former stock broker, who plead guilty to 11 federal felonies regarding a $65 billion Ponzi scheme, recently spoke with Steve Fishman of New York Magazine, ostensibly to tell his side of the story. Simply put, that's a tough sell. His family won't speak to him, while his friends, his investors, and pretty much the rest of the American public hate him with a passion. 

That's why the most startling quote to come out of Fishman's interview might be the one in which Madoff claims he didn't need to make money through fraud; rather, he says he "allowed himself to be talked into," essentially, fleecing people. By whom, Bernie? Said Fishman:

It is an elaborate kind of mental gymnastic. What he means is that at the point around 1992, when he had this advisory business going, suddenly on the scene come these large hedge funds and big banks, and they, by his lights, talk him into taking billions of dollars. He gets behind very quickly with that money, he puts it in treasury bonds yielding two percent and he returns to them 15 percent, just a flat out lie. He sees that as his moment of weakness, when he let himself get talked into taking that money.

Fishman explained that big banks and hedge funds, we know now, act as feeder institutions; they don't invest their capital so much as pay experts to do it for them. And that's where Madoff came in.

It's not everyday that an investment banker who grew up in the outer boroughs of New York City gets approached by massive financial institutions asking him to be in charge of billions of dollars. Irresponsible of the big banks, maybe, but that doesn't excuse Madoff in the least.

He wouldn't give them any info about volume, about his strategy. He said, "I told them if they didn't like it they could take their money elsewhere, and they didn't." He adds, "Look, I got 15, 18 percent returns consistently, and everybody knew I shouldn't have been getting them." His quote to me was, "If you don't think they knew, they did."

Statements like this could offer the opportunity for Madoff's victims to seek compensation from the financial giants themselves. The investors' trustee has already made public demands of Chase Bank and New York Mets owner Fred Wilpon, alleging that Ponzi scheme money flowed through their veins.

While it remains to be seen what new recourse wronged investors have, following this interview, Fishman said there was a chance that $20 billion in equity, or some portion of it, may be returned.

Ultimately, this kind of compensation may offer little comfort to the victims, some of whose lives have been irreversibly rocked by the fraud. Madoff says he understands their anger, and goes to great pains to make his sorrow and remorse known. We might not buy that this was something he just got "talked into," but Fishman said that in explaining and accounting for his actions, Madoff has taken the line that he is a good person who made a mistake.

He was not somebody who woke up one morning deciding to fleece everyone he knew and cared for. I frankly think that's true. He made hundreds of millions of dollars legitimately, which makes this whole Ponzi scheme that much more bizarre, because in some ways it's a vanity project. I do credit him with being hurt and registering the misdeeds and unhappiness he's caused his family. At the bottom of this, is Madoff a guy who can have real emotions, having done what he did to his friends and family? You know, that's something that we probably won't give him the benefit of the doubt on.

Fishman said that his interview with Madoff also shed light on what he called a "twin drama." Certainly, Madoff's punishment and the victims' compensation are at the front of most people's minds. But there is also the smaller, perhaps more heartbreaking story of the scandal's tragic (and fatal) impact on Madoff's family. Whether you feel sorry for him or not, his wife's estrangement and his son's suicide aren't matters that can be settled in court.

Certainly he called me to set the record straight. I think he's also extremely frustrated and unhappy that he can't speak particularly with his remaining son, Andrew. Though he didn't say this, it was clear to me that he felt that if he could make Andrew understand—a pie in the sky project, but nonetheless one he sticks to—if he could speak to Andrew, he might be able to heal this wound.

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Comments [12]

Iferness54 from Alexandria, VA

Two old rules of thumb still apply: "If it seems too good to be true, it probably is." and "Don't put all of your eggs in one basket." Bernie's investors violated both of these rules. Consistently earning 15-18% returns should have been a red flag for these investors. Instead, they just got greedier and greedier and kept putting more and more money in. As long as they were making money hand over fist, they had no complaints. When things went south, they wanted to put all the blame on Bernie. They are not without fault and should bear some of the responsibility. Personally, I don't feel sorry for them at all.

Mar. 04 2011 09:03 AM
dovid from brooklyn

I know hes a crook
now that we can look back at what happened it seems he makes some great points.
1. the investors never lost their principal
2. they should have realized they were making to much return. finance 101. they were greedy.
3. he didnt do what he did just to steal as he didnt need the extra money and it didnt really go to him.

compare him to a MLM empire where the people at top take all the cash and everyone else looses it all. intentionally. and bank managers that took out millions before they crashed.
i just think were going after the wrong guys.

Mar. 02 2011 10:56 PM
J

Why is this man being given any media attention whatsoever? It's obvious his family was in on the scam, and this was probably true of many of his wealthier investors who benefited by being on the front end of his ponzi scheme. While it's absolutely true that we need regulatory reform in the financial sector and that there are many other Wall Street execs who violated the letter and spirit of the law and should be held accountable, we do not need to hear that from this man. He is a grifter. His mother was a grifter. He's a pathological liar, and the very fact that he has the mainstream media in the palm of his hands right now is evidence of his perfidy. Covering anything this man says is simply tabloid journalism. It may sell, but it doesn't inform.

Mar. 02 2011 11:26 AM
a g from n j

madoff, is the little pusher on the street[i'm not saying that's okay] the banks, are the drug cartels. they are bailed out by our corporate welfare. we want to fixate on little b-bernie,while the big b's banks, shoot up the veins of our children with inherited poverty. it reminds me, of, a death being a tragedy,but genocide just a statistic. our sense of proportion is totally skewed

Mar. 02 2011 10:31 AM
bernie from bklyn

how is what happened to his family "heartbreaking"? they were all in on it and they deserve whatever misery they're enduring right now. we should all have ZERO sympathy for this family.
when he accentuates "only me" in the interview he really is confirming that she knew everything. that was so obvious to me...for such a good liar, that was a bad job of lying.

Mar. 02 2011 10:23 AM
Robert from NYC

Bernie from bklyn has my vote! I would love to know how much that couple has who is giving back that huge sum of money. I don't remember their name nor the actual amount but it was in the millions. This also brings out how many multi million and billon-aires there are and how much money they possess.

Mar. 02 2011 10:22 AM
a g from n j

brian,who gives a rats about, what madoff sees himself as, or not. the bigger more important question, than the money people lost with him specifically, is, the deregulation, that "allowed" ,the whole financial infrastructure, to look the other way in the first place. and of course, "looking the other way", is not a passive act. madoff, continues to be a smoke screen diversion for the bigger crimes of wall st.,industry,and gov't compliance. are we all asleep,or just dumb !

Mar. 02 2011 10:19 AM
Ellen from Brooklyn

I read the article and I think does a great job humanizing Madoff without releasing him from blame. It's easy to think, "he's a monster, he's nothing like me. this could never happen to me" but in reality you can see how his scheme spiraled out of control. It's important for people who walk the line with everyday lies to realize that they might not be so different. We all need to make sure our moral compass is working properly from time to time. Don't assume you're above it!

Mar. 02 2011 10:19 AM
David from Queens

The only validity to Madoff's athlethic rationalizations is the culpability of those who paid compensation to themselves for knowingly throwing clients money down a rathole.

Mar. 02 2011 10:18 AM
bernie from bklyn

are you honestly trying to tell me that these people who invested with madoff didn't know that these returns were fishy?
they all deserve to lose their money because they didn't care about 'how' but 'how much'. they ALL participated so they can all go to hell along with bernie!

Mar. 02 2011 10:14 AM
Robert from NYC

Interesting. Well, does it make it right?!!!! lol

Mar. 02 2011 10:14 AM
paulb from brooklyn

Brian, would you mind asking the reporter if the $50 billion usually given as the losses in the Madoff affair represent what people invested in the schemes or what on paper they were supposed to have in their accounts?

Mar. 02 2011 10:13 AM

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