Madoff scam reveals regulatory failure

Madoff scam reveals regulatory failure

Posted by press in Regulations on 03 13th, 2009 | no responses

 

Now that he has pleaded guilty, Bernard Madoff’s story might be seen to have reached an end of sorts.

But so vast was the scale of his crime that the legacy of his extraordinary fraud will take years, if not decades to reveal itself.

First and foremost of course are the many livelihoods and life savings lost to Madoff’s fraudulent scheme.

But behind the personal fortunes that Madoff leaves in ruins, looms the crumbling wreckage of the US’s system of financial regulation.

Risk profiles

It’s not as if the regulators here were in such good shape anyway.

A banking industry on its knees, threatening to bring down the rest of the economy, has led many on Wall Street and in Washington to conclude that something is fundamentally wrong with the way the US polices its financial markets and the players in them.

Just this week no less than Federal Reserve Chairman, Ben Bernanke, and Treasury Secretary, Timothy Geithner, have spoken of the need for the US, if not the world, to have a full rethink of how the financial industries are regulated.

 

The trouble is that financial regulation, by its nature, can be a pretty abstract business.

Getting to the bottom of how the US’s regulators failed will require some of the finest minds being applied to some horribly complex subjects, which, to the general public at least, may be a tad elusive.

Read the rest of the article here.

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