Jacob Heilbrunn

The Return of Bernie Madoff

Bernie Madoff is talking. That's a big deal. Madoff fell off the charts as various crises erupted around the world. Back in the USA, the economy seems to be perking up, which has also relegated Madoff to obscurity, at least where the television cable channels are concerned.

But now Madoff is making his move. In an interview with the New York Times, he announces "they had to know." The "they" requires no explanation. JP Morgan is already howling that the court-appointed trustee Irving Picard (who himself is earning millions off the investigation--hunting down Madoff's misdeeds has become its own industry) is going beyond his mandate. As Frank Rich recently observed, Madoff was a "second-tier player." But he could lead to bigger fry. The Wilpons, who own the New York Mets, are already in big financial trouble for their extensive dealings with Madoff--Donald Trump is angling to buy a majority stake in the team. Then there are the hedge funds and banks that were linked to, or in cahoots with, Madoff.

At this point Madoff has little to lose. President Obama shows little appetite for curbing the excesses that led to the last financial crash. Madoff cannot achieve redemption. His historical role as the biggest Ponizi schemer (so far) in history is set. He became the type-cast bad guy. For awhile Madoff took all the credit, if that's the right phrase, for the malversation he oversaw. That's changed. Now he seems to be interested in ensuring that his collaborators, witting or unwitting, also take the fall (though he is notably exempting his own family members from any knowledge of his transgressions).

Madoff's own crediblity is shot. But if the information that he's apparently providing to Picard pans out, then he may get his own measure of revenge for the humiliations he has suffered, and is suffering.  Balzac said that behind every great fortune is a crime. Madoff now seems intent on demonstrating the truth of that axiom. One thing seems clear: Madoff is not going to go down quietly. The aftershocks from his exposure may well continue to roil the financial world.

If Obama had some gumption, he might consider pardoning Madoff and putting him in charge of financial regulation. After all, Franklin Roosevelt made the former bootlegger Joseph P. Kennedy head of the SEC on the theory that he knew full well where and who the criminals were. Kennedy did a spectacular job. Madoff probably would as well. He would have everything to prove. For now, however, the specter of Madoff talking is probably scary enough for the banks that were involved with him.