Bernie Madoff: Banks "Had to Know" About His Scheme

In his first interview since his 2008 arrest, Bernie Madoff tells Diana B. Henriques of the New York Times that the banks and hedge funds he dealt with were complicit in pulling off his now infamous $90 billion Ponzi scheme. “They had to know,” he said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’"

The Times:

While he acknowledged his guilt in the interview and said nothing could excuse his crimes, he focused his comments laserlike on the big investors and giant institutions he dealt with, not on the financial pain he caused thousands of his more modest investors....

He did not assert that any specific bank or fund knew about or was an accomplice in his Ponzi scheme, which lasted at least 16 years and consumed about $20 billion in lost cash and almost $65 billion in paper wealth. Rather, he cited a failure to conduct normal scrutiny.

On the one hand: wow, what a dick. On the other hand, it's pretty clear that at the time Madoff's scheme was going down, financial institutions were dealing in any number of shady financial practices and were seriously lacking in oversight. As TalkLeft points out, the "but they must have known!" reaction has been evoked all too often in recent years.

"They had to know" seems the operative phrase of the past decade. "They had to know" that the Bush tax cuts would blow up the budget. "They had to know" the Iraq Debacle was a fraud. "They had to know" that Wall Street was a crooked casino. "They had to know" that banks were abusing HAMP. And so on.

Madoff's Ponzi scheme was just one, relatively small part of a much bigger scam being perpetrated by Wall Street in the aughts -- a scam that cost countless Americans their livelihoods and that is almost certain to affect us for years, or decades, to come. And Madoff only benefited from the shady financial dealings and lax regulations our government and financial system gave the thumbs-up to over the years. So who's really the dick here?