Madoff: If Wall Street Knew, The U.S. Government Knew
January 5th, 2009There is a revolving door between the U.S. Government and the Wall Street firms mentioned below. Maybe someone should ask Hank what he knows about Madoff.
Via: Financial Times:
Large Wall Street firms privately harboured suspicions about Bernard Madoff’s investment business, in some cases steering clients away from dealing with him, but were reluctant to share their concerns with regulators, according to US bankers.
Banks were sceptical that Mr Madoff could deliver the consistently high returns that he reported, and they were also put off by a lack of transparency at his investment firm. For these reasons, big Wall Street firms are notably absent from the long list of victims of Mr Madoff’s alleged Ponzi scheme.
Fabio Savoldelli, chief investment officer of Merrill Lynch Investment Management prior to its 2006 merger with BlackRock, sounded the warning internally years ago. One of Merrill’s financial advisers, who deals with clients worth tens of millions of dollars, recalled Mr Savoldelli’s suspicions of Mr Madoff’s returns eight years ago.
Two years ago, an internal Merrill report drawn up in connection with Merrill’s European fund of funds group, concluded the group should not deal with Mr Madoff, the financial adviser said. “We had a red light on doing business with him. There was no transparency.”
However, a fear of alienating clients who had invested with Mr Madoff prevented many Merrill executives from voicing their concerns too loudly. “You sell your product but you don’t bad-mouth others. You don’t say bad things about Bernie Madoff. That is where you cross the line,” one former Merrill staffer recalled being told by a senior executive.
The large surviving investment banks did not put Mr Madoff’s funds on the recommended list of their investment arms and never dealt directly with him in their prime brokerage arms.
Goldman Sachs Asset Management said it “never felt comfortable with Madoff”, because it “never understood the investment process or the returns … if clients wanted to invest with him, they did not do it through us”.
Goldman’s scepticism extended to Tremont Group Holdings, a fund of hedge funds based in Rye, New York, that gave more than $3bn to Mr Madoff through several channels. In 2001, when Tremont was sold to Oppenheimer, the brokerage, Goldman was representing another potential buyer. But Tremont did not let Goldman’s team have a close look at the firm’s operation, so Goldman’s client backed out.
Goldman never sounded the alarm with regulators. However, investment banks have no obligation to report suspected wrongdoing, lawyers say.
This back handed manner of dissing Madoff now that he has been outed is so ridiculous. These Goldman comments in the news stories are particularly troubling to me as we know that Hank, while at Goldman shorted his own asset backed securities thereby ensuring his firms survival. And no one has as yet batted an eyelash about it all.
Even more troubling according to a post on this site is that a SEC person who was supposed to be monitoring Madoff is now going to work for a firm that will investigate him. Uh, talk about a revolving door and finding a way to cover your own shortcomings in your previous job by finding a job with a firm that will ensure that no one will ever know you puked. If you even tried to, they will have access to records that will HOOVER the entire NUMBNUT operation. They will clean it up with that green shit they used to spread on the floor during school and no one will ever know it happened. UTTER BULLSHIT.