Bernie Madoff and the Crisis: The Public Trial of Capitalism

You conducted extensive interviews for your research including with Bernie Madoff. Did he express any remorse? What were your impressions of him?

Expressing remorse and feeling remorse, being remorseful, are obviously two different things. I think when people ask the question, “is he remorseful” or “does he really feel sorry,” they are trying to get at the latter. Bernie Madoff has expressed publicly at his sentencing hearing (which is available for perusal online) and in our interviews has said that he is remorseful. To give one quote, “It is painful to know the suffering I caused to people who had trusted me, the devastation I caused my family, and the knowledge I caused the death of my son.” On the other hand, he made comments that he was “used” by his investors. I think just like we should beware measuring grief by outward manifestations of sorry, we should also avoid judging internal feelings of remorse, as a rule. My impression of Madoff after about eight years of communication is that he sees himself as the unfair recipient of a double standard of punishment that wasn’t meted out on other financial offenders (such as those who rigged LIBOR or those responsible for drug cartel money laundering in the billions at HSBC). He also sees himself with some level of grandiosity as a pioneer in the space of electronic trading and is desirous of changing the narrative around his crime. Because I am not a psychologist, I withhold any kind of professional assessment of whether he is sociopathic or has narcissistic personality disorder.

What major conclusions did you draw from your research?

My research was primarily focused on the public reaction to Madoff and his crime from the time of the revelation of his crime (in December 2008) until his sentencing in 2009. I analyzed the coverage of major media outlets representing a wide political spectrum, and the narratives and themes that emerged, followed by in-depth interviews with the major editors and journalists. What became very evident from this research was that Madoff’s crime—which was, in fact, unrelated to the Financial Crisis of 2008 in any way, except for the fact that it led to Madoff’s insolvency—was conflated with the wrongdoing that led to the Financial Crisis itself. I have frequently had to disabuse individuals of their belief that Madoff “caused” the crisis, and the coverage is reflective of this blurring of facts. Because Madoff and the Crisis were linked in public consciousnesses and in media narratives, discussions of Madoff’s case became a way of simultaneously addressing the issues that were, in fact, related to the Crisis. To give a few examples, the Securities and Exchange Commission’s spectacular failure in the Madoff case was used as a way of also discussing regulatory failure broadly, and a pervasive blame-the-affluent-victim (“why did they turn a blind eye?”) narrative was employed as a device to promote an increasingly skeptical view of how wealth is acquired in the United States.

Can this happen again?

Not only can this happen again, it already has happened. The number of Ponzi scheme prosecutions has gone up, not down, since Madoff’s incarceration. His 150-year sentence, most experts agree, is unlikely to deter such crime, just as the death penalty is an ineffective deterrent to violent crime. A recent example of a very large scheme that collapsed in 2017 was that involving the Woodbridge Group and cost investors $1.2 billion. Of course, this is significantly smaller than the $17.5 billion involved in the Madoff case, but let’s remember that the reason the Madoff Ponzi grew to this figure was because of repeated failures to discover it over its decades-long run.