Today the House held a so-called hearing on the Madoff Ponzi scheme. The Financial Services Committee met at 2:00 p.m. to question witnesses about the SEC and how it could have overlooked the Ponzi scheme that had been red flagged off and on since 1989.
Bernie Madoff’s firm, one among some 11,000, had never been scrutinized or reviewed by the SEC. The “hearing” today is an attempt to close the barn door, irregardless of the fact that the horse is already out of the barn.
Each of the Representatives at the committee hearing gave a statement. It was the usual B.S., everyone pointing fingers at everyone else. There is more to come, as each is seeking his 15 minutes of fame and the time allotment for each statement was approximately five minutes down to a single minute. Please excuse the cynicism, but this is the same committee that faltered when it came to making the rules.
SEC Inspector General David Kotz, investigating his own entity, was unable to give a timetable specific to an outcome from his investigation. Under questioning, Kotz said that he would provide a report to Congress as each issue was investigated.
Apparently, there were red flags hanging from every window of the Madoff Lipstick Building. More apparent, from the hearings today, we learned that the SEC is color blind. No one in the SEC seemed to question anything Madoff did, even though there were complaints against Madoff over the past decade or so.
If one thing came out, under questioning by Representative Brad Sherman (D-CA), the SIPC has about $1 Billion in assets and covers each investor for $500,000. In other words, the SIPC does not have the funds to cover the Madoff scandal if the claims exceed $1 Billion. And, all those little SIPC signs on most banks may mean nothing of value in today’s world.
After a little over three hours of testimony (and it isn’t over yet) so far I have concluded that Rep. Watts (D-NC), Rep. Ackerman (D-NY), and Rep. Sherman (D-CA) are the ones who aren’t afraid to cut the SEC off at the knee. So, kudos to Watts, Ackerman, and Sherman for today.
But, let’s not get our hopes up. Unless there is a miracle, and I’m not a believer today, with David Kotz as Inspector General of the SEC there is little or no hope of anything coming from this hearing or this investigation. Kotz is paid by the SEC to investigate the SEC. Oh, yeah! We are going to get some more BS.
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