Many Wall Streeters were relieved by the arrest of Bernie Madoff yesterday. In fact, applause broke out at one promiment asset management desk when the news broke yesterday. For years Madoff was regarded as a menace by asset managers who lost client funds to what they always suspected must have been a rigged shop.
“His returns were just too good to be honest,” one asset manager told us.
Madoff’s asset management business drained money away from much larger firms because he delivered steady returns even in the roughest markets. He consistently told clients that his firm was earnings 1% to 2% per month, even as the rest of the market tanked and asset management clients saw losses at other firms. Honest asset managers were frustrated because they knew Madoff’s returns were all but impossible but clients didn’t care: they just wanted the returns.
Yesterday, when news of Madoff’s arrest broke in the Wall Street Journal, spontaneous applause broke out in the asset management offices of at least one prominent Wall Street firm.
“At last we were free from this awful man,” one Wall Streeter said.