Profiles in Scumbaggery

Of course, no blog about business failures would be complete without an occasional series about the men and women who have brought us these monuments to bad behavior, which I’m going to call Profiles in Scumbaggery because “Profiles in Douchebaggery” was taken. I’m going to try to stick to current events, and scumbags whose bad behavior is relevant to business in some way, but even so I’d expect to see one of these posts pop up every few weeks at the longest. And I can’t imagine a better individual to start off this series than the man whose work almost single-handedly redefined what it means to be a scumbag in America, if indeed not the world in general. The one, the only, Bernard “Bernie” Madoff…


In any time before the era of Internet news and 24 hour satellite channels, Bernie would have used up his 15 minutes of fame and left the stage, but in this twenty-first century it seems no one ever does anymore; consequently I was not really surprised to find an article about the man online this week. In a story from New York Magazine about Madoff in Federal prison, the former con artist is described as being unrepentant, blaming his victims for being rich, greedy, and willfully oblivious to the fact that the “genius” fund manager who claimed to be making them rich was, in fact, actually running one of history’s greatest Ponzi schemes…


I call this article to your attention not because I think there’s much I can add to the reams that have already been written about Madoff and his crimes – enter his name on any search engine you like, and there will be millions of pages of text written by people more capable and more knowledgeable submitted for your consideration – but rather, because this is the only true answer to the question that all of the Madoff victims (and most of the rest of America) have been asking for years now: why did he do it? How is it possible for one man to do that much harm to that many people without actually growing horns and a tail?


Some of it, of course, is simply ego run amok. When Madoff claims to have made a few bogus trades, expecting to make up the difference later, and then never managed to catch up, I think we should believe him. Not that he was blameless, of course; simply that his massive overconfidence led him to believe that he could do as he pleased, without any chance of facing the consequences later. We should also consider that his contempt for the Bush-era SEC is probably warranted; the Commission has always been a little too close to the agencies it is supposed to keep watch over, and has always been far too lax in both investigation and enforcement – because politically, it would be unwise to do anything else. The whole system depended on everyone playing by the rules and not taking the kind of chances that could destroy our economy and way of life, and all it would ever have taken to game the system is one man who knew the rules – and was willing to take insane risks…


If this sounds familiar, it should. It’s the same kind of lack-of-thought that was responsible for the cozy relationship between third-party auditors and their clients that created the Enron scandal, or the de-clawing of the FAA that make airport security a joke and led directly to the 911 attacks, which we can blame on political maneuvering and lobbying by the airline industry. Years of deregulation and under-emphasis on government oversight following decades of politically emasculated enforcement set up a climate in which millions of people could do whatever they wanted in our financial markets – and it only took one of them to screw things up to the tune of $65 billion…


So if the story of Bernie Madoff disgusts you, let me recommend you take a good look in the mirror before you start telling anyone about it. Because the fact is, we made Bernie what he is today; we may not have lit the match, but there is no doubt about who set the charges. And until such time as we, you and I and every other American, start demanding accountability from our government and requiring that our watchdog agencies start actually enforcing the laws they were created to oversee, there can be no question that it’s only a matter of time before it all happens again…