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Did the big banks know Bernie Madoff was a crook?
In Madoff's first interview since being arrested in 2008, the notorious fraudster says the banks were in on the game. Should we believe him?
 
Bernie Madoff maintains that his family new nothing of his crimes, but that some banks were complicit in his fraud.
Bernie Madoff maintains that his family new nothing of his crimes, but that some banks were complicit in his fraud.
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Bernard L. Madoff, the infamous Ponzi schemer who stole tens of billions of dollars from investors, has begun pointing fingers. In his first interview since his arrest in December 2008, Madoff told The New York Times that certain unnamed banks and hedge funds were "complicit" in his fraud. "They had to know," Madoff said. "But the attitude was sort of, 'If you're doing something wrong, we don't want to know.'" Irving Picard, the trustee who's trying to recover the funds Madoff stole from victims, is suing JP Morgan Chase, among others, for failing to stop the scam. Does Madoff's statement help make that case? (Watch an AP report about Madoff's accusation)

Yes. The banks likely knew all along: While I'm reluctant to accept the word of a "liar, a thief and a con man," says Alain Sherter at BNET, I don't find it hard to believe that the banks who dealt with Madoff "knew something was fishy, but chose to look away." After all, that's in line with the "prevailing ethos during the financial crisis." The entire industry was caught up in a "daisy-chain of willful ignorance."
"Bernie Madoff's jailhouse interview: banks were 'complicit'"

But where's the smoking gun? Madoff's "confusing" claims contradict each other, says Stephen Gandel at TIME. He says the banks knew what was going on, even while expressing surprise that he managed to fool them. And he fails to provide a "smoking gun" to back up his assertion. Plus, it's also unlikely that Picard would use Madoff as a trial witness. "He's not really a credible witness. Actually, he's not really a credible anything."
"Madoff's banks claim: Does that raise the heat on JP Morgan?"

It's yet another argument for better regulation: Madoff's claim is not "inconceivable," says Andrew Leonard at Salon. But we'd be closer to the truth if we had "adequately funded and staffed" regulators overseeing the financial markets. If there's one thing we learned from "scandals a la Madoff," it's that "active, involved and well-funded regulators" are essential.
"Why we should believe Bernie Madoff now"

 

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