Madoff Scandal vs. Labor Board Regs

[louis c]

Here's my comparison. I am the elected Business Manager of a small local union in Boston. I represent about 200 members. I make a small stipend ($750 a month) as the union Rep while I work my job for the company. The local has an elected Treasurer ($230 a month) and a Financial Secretary ($300 a month), also fellow employees. Every 3 years the National Labor Relations Board (NLRB) audits our books. Every year we need an independent audit and we file it with the NLRB. We take in about $60,000 in dues a year and make about $55,0000 a year in expenditures. I actually like the system of accountability because it shines light on our work and gives the members confidence in the union. After all, it's their money. However, to have to produce toll receipts of $1.50 to federal auditors shows how thorough we have to be. I know a lot of small unions have trouble electing qualified people for Treasurer and Financial Secretary because the reward does not match the risk. A single honest error can result in serious trouble. For 9 years, all under the Bush NLRB, I have scrupulously kept detailed records. We have eliminated mileage, gas, meals and cell phone reimbursements to officers because the record keeping just is not worth it. I have gone to union sponsored seminars that warned us of how detailed and vigilant we needed to be on even the most mundane of expenses.

I mention this because I can not believe that the NLRB can be so thorough in their requirements and the Security and Exchange Commission (SEC) could be so lackadaisical in their oversight of investment houses. God help me if I can't produce a toll receipt, properly dated and recorded, but Bernie Madoff can swindle clients out of fifty billion dollars ($50,000,000,000) over the same 9 years. That's incredible to me and just shows you where the Bush Administration's priorities were for the past eight years.

[patrice]

1. Absolutely literal concrete ARISTOCRACY that OWNS our country and will continue to do so

until we get workable campaign finance reform.

[panAmerican]

2. There are no stringent requirements precisely to facilitate

this kind of theft. Even before Madoff did what he did, there have always been flaws in the system. Some were remedied, but most regulations do not go far enough.

As compensation for the SEC's inability to audit more than once every 5 years, if that, there should be a mandate for stiff fines and jail time for the offenders, and minimum reimbursement levels to defrauded investors.

Yeah, I'm dreaming. I know.

[ladjf]

3. What happened to the government oversight of this fund?

Insurance companies are required to report annually to their respective state government the audited state of the asserts, including cash reserves. Are there no such regulations for investment funds?

[louis c]

4. That's my point, exactly

where is the oversight of the people that can do real damage. I can understand that every organization that is responsible for the money of others need audits and oversight, but where is Wall Street's oversight?

[ladjf]

5. I have no idea what oversights are required for investment firms.

But, I wrote software for insurance companies that built the annual reports required by the state.
Those reports showed to the penny, the exact financial situation of the insurance company. And,they
were audited by outside accounting firms. It was a simple and relatively inexpensive process.

In the case of companies such as Madoff's, that had assets in the billions, the State of New York could justify assigning some full time accountants exclusively to Madoff's fund. I think it would have been difficult for Madoff to fool several top notch accountants with discrepancies that were in the magnitude of multi-billions.

How many more funds like Madoff's are out there but haven't been "busted" as yet? That could be the
"black beast" of this entire financial crash. If there is insufficient oversight, there may be dozens of hundreds of funds that hare using the same simple ponzi scheme. Let us that such is not the case.

[charlie]

6. That's the big question

We don't know. Nor will we know who owes/owns what in this debt overhang until we start unwinding some of those "creative" financial packages like CDOs and CDSs. It's no wonder the major banks are constipated right now -- nobody knows anything and every passing day brings fresh reasons not to trust anybody. The idiots killed the last shred of trust in the soundness of the US financial system.