As each day passes, the anger at Bernie Madoff grows. Today Business Week personal finance editor Lauren Young writes “Why I Hate Bernie Madoff.” We don’t recall ever before seeing an article in Business Week openly declaring hatred for someone. And we’re pretty sure we’ve never seen a columnist at BW applaud a reader for wanting to beat someone to death.
Young is particularly worked up because Madoff hurt so many well-off but not exactly fabulously wealthy people. Let’s have her explain.
It’s almost 3 a.m. and I should be sleeping, but instead I’ve been lying in bed fuming. Why? I hate Bernie Madoff.
Hate, I realise is a strong word. And to throw venom at someone I have never met is highly unlike me, who tends to find something redeeming in everyone.
But Madoff, the allegedly rogue investor who managed to pilfer some $50 billion of investor’s cash, destroyed the trust of so many.
Sure, you’ve read about those boldfaced names who hired Madoff to run their investments. But there are plenty of regular people who had money with him, too, including a member of my extended family in Philadelphia. He is a father of three who left his native South Africa more than three decades ago with nothing and brought his family to the U.S. for a better life. He poured everything into his career and his family. His $1 million investment with Madoff-part of his retirement savings-is probably gone forever.
And then there is the New York lawyer who had three-quarters of his net worth tied up with Madoff. (“He invested with Madoff because his father invested with Madoff. That’s what you are supposed to do in his family,” a friend confided in me.) On Sunday the attorney took his young children to see Santa Claus in Westchester. I can only imagine what was going through his head as he watched his children on Santa’s knee, sharing their own hopes and dreams. We all know what happens to a dream deferred…
I don’t know Robert Powell, whose wife worked for a foundation that had all of its assets “managed” by Bernie Madoff’s firm. Now, her job—and her entire retirement account-have evaporated along with the charitable cause that employed her. You can read the Powell family’s harrowing account here.
Her strongest point is that it simply doesn’t make sense to say that people who gave their money to Madoff should have done more due diligence and monitoring.
“Sure, you could argue these investors should have known better than to believe in an investment strategy that seemed too good to be true, or that they should have seen the signs of wrongdoing,” she writes. “But most people-I’d venture to say at least 90% of us-don’t have time to manage our money or to keep tabs on the “professionals” we hire to do just that.”
Apart from the fund of funds, who have no excuse, it’s just unrealistic to expect investors to to be able to properly investigate money managers. They will always wind up using heuristics such as reputation and past performance. Just because you have enough money to invest with a guy like Madoff doesn’t mean you’re very smart about how finance works. And no one deserves to be wiped out just because he’s dumb or even greedy.
It’s really hard to overestimate the amount of anger people feel about this. The New York Post called him “The Most Hated Man In New York.” Readers of Business Week are calling for blood.
“Take him and the people he ripped off out where nobody can hear the screams and let the bunch of them work things out,” a reader called “Dingbat” writes.
“As you can imagine, I like Dingbat’s suggestion the best” Young chimes in.