First off, I want to be perfectly clear on something . . .
Bernie Madoff got exactly what he deserved. We haven? yet printed a book too big to throw at him.
The point of this post is not to argue that Madoff is somehow not to be blamed for the wanton destruction he caused on other peoples?finances.
The point of this post is to underscore, once again, a massive breakdown in systemic safeguards and a massive retreat from reality by a whole bunch of people who should have known a whole lot better.
Randall W. Forsyth has laid out the various red flags that were ignored over the years by funds managers, investment advisors and even Madoff? own family in an article posted June 30 on barrons.com entitled ?adoff Is ?vil,?But Hardly Unique?(http://online.barrons.com/article/SB124632749654371491.html).
Forsyth, a veteran reporter who has been observing the Wall Street scene for close to thirty years, argues that ?he very idea that he [Madoff] acted alone utterly beggars belief.? Forsyth is not suggesting a criminal conspiracy with Madoff as the ringleader. He is arguing a tacit conspiracy of ignorance by the ?rofessionals?who were charged with preventing these kinds of financial rape-and-pillage sessions.
Forsyth characterizes the managers of the various feeder funds who kept Madoff supplied with capital as ?seful idiots who chose not to delve too deeply into Madoff? practices lest true due diligence might disturb the flow of hundreds of millions of fees they collected.?
There were some fund managers, though, who smelled something rotting in the Madoff empire a long time ago and refused to play along. According to Forsyth, James Hedges of LJH Global Investments stands out as one hero who refused to pony up billions of dollars of investors?money to feed Madoff? voracious appetite. ? have said over the years to many people: Do not touch Madoff with a barge pole,?Forsyth quotes Hedges as saying.
Forsyth? insights illuminate a sad reality that the proactive evil perpetrated by the Madoffs of the world cannot succeed without the cooperation of the passive evil of financial gatekeepers who elevate ignorance to an art form when confronted with the choice between competently discharging their professional responsibilities or making a ton of money.
We saw the Lucifer Effect at work in the financial markets with the mushrooming of derivatives trading and we see it again now in the muck left in the wake of the Madoff scandal.
Sometimes mass psychological dysfunction leads to genocide, sometimes it leads to oppression, and sometimes it leads to financial catastrophe.
Bernie Madoff? success at convincing intelligent and well-informed people to buy his snake oil points up a spiritual deficit in our culture that continues to imperil our national well-being. Tarring and feathering Madoff is a good start, but if we think we?e solved the problem because we?e ridden the rascal out of town on a rail, then we are tragically naive.
The Obama administration has rightfully proposed a series of new regulations in response to Madoff. They are but a start, however, in preventing future billion-dollar scams. It is only when we, as a culture, can summon up the moral fortitude displayed by James Hedges to resist the siren songs sung so convincingly by the billion-dollar scammers that we can begin to enjoy some measure of security from their predatory schemes.
The behavior of too many on Wall Street is a violation of biblical ethics. The teachings of Christianity, Judaism, and other faiths condemn the greed, selfishness, and cheating that have been revealed in corporate behavior over decades now, and denounce their callous mistreatment of employees. Read your Bible.
– Jim Wallis, www.sojo.net/blog/godspolitics
September 18, 2008
Jim Wallis, the evangelical founder of Sojourners, has thusly summed up the theological implications of the recent capital market meltdown so eloquently that I hesitate to presume to add to the discussion.
With so many Americans believing that we live in a Christian nation, the disconnect between our economic practices and the Bible’s repetitive trumpeting of warnings against greed and economic injustice is truly astounding.
Beginning with the laws given to Moses by God right on up through the post-Resurrection preaching of Paul, Scripture consistently tells us that we must always be on the guard against greed and that we must always seek economic justice for all.
And yet, here we are again, suffering through another devastating economic catastrophe brought on by greed.
We can erect all of the regulatory schemes our imaginations can spawn and we can have politicians denouncing Wall Street from now until the next millenium, but until we learn to embrace the totality of Biblical teachings about economic morality as a part of our social fibre, we can expect to see this cycle repeated once every few decades.
Back in the year 2000, a really fine little film, deceptively entitled “The Big Kahuna,” was quietly released.
Even with the star power combo of Kevin Spacey and Danny DeVito in the lead roles, “The Big Kahuna” died a fast death at the box office. According to the National Association of Theatre Owners, “The Big Kahuna” grossed only a miserly little sum of $3.1 million.
And that is unfortunate. This is a film that needs to be seen.
Based upon the stage play “Hospitality Suite” by Roger Rueff, “The Big Kahuna” posed some fascinating questions about the uneasy intersection between faith and commerce in our culture, and it posed them in a way that really touched home for those of us who have stood at that intersection.
Back in the mid-to-late-eighties, I was off in a whole different professional world, pursuing a career as a young corporate lawyer. How I got there is a long story, and how I got from there to ordination as a Presbyterian pastor is an even longer story, neither of which will be told in this post.
The essential point is that, after serving the customary apprenticeship slaving away for a few years in a large national law firm, I had made my way to the legal department of a major financial institution, which I will refer to here by the fictitious name, “Anonymous Savings and Loan Association.”
I went to work for Anonymous Savings because it was truly out on what was then the cutting edge. Seizing upon a recent re-tooling of federal financial regulations that permitted federally-insured savings and loan associations a much wider range of investment options, my new employer was leaving the competition in the dust.
Upon my arrival, I was impressed not only by the sense of vision but also by the very high caliber of the people working at the senior and middle management levels. The Finance Department boasted a number of accountants from “Big Eight” (as they were then known) accounting firms. The Investment Department had lured some top-notch analysts from big Wall Street houses. My fellow lawyers had all come from reputable law firms.
And these people were not just smart and extraordinarily competent. They were also highly ethical, very much aware of the obligations that came with the privilege of federal deposit insurance. We were indeed riding the cutting edge, but we were determined to ride it responsibly and within the boundaries of the relevant federal and state regulatory schemes.
