Victims or accomplices?

Last month, in the now-famous Chicago Tea Party diatribe, CNBC’s Rick Santelli said the people who would be in line for some government help with their mortgages are “losers.”

Yesterday,an anchor at the same network suggested Bernie Madoff should be “waterboarded” and pointed out that his victims “did nothing wrong.”

Is there a parallel?

Yes, according to Joe Nocera of the New York Times. He writes today that Madoff had accomplices — his victims:


“These were people with a fair amount of money, and most of them sought no professional advice,” said Bruce C. Greenwald, who teaches value investing at the Graduate School of Business at Columbia University. Mr. Hedges said: “It’s like trying to do your own dentistry. It is a real lesson that people cannot abdicate personal responsibility when it comes to their personal finances.”

And that’s the point. People did abdicate responsibility — and now, rather than face that fact, many of them are blaming the government for not, in effect, saving them from themselves. Indeed, what you discover when you talk to victims is that they harbor an anger toward the S.E.C. that is as deep or deeper than the anger they feel toward Mr. Madoff. There is a powerful sense that because the agency was asleep at the switch, they have been doubly victimized. And they want the government to do something about it.

What happened to the victims of Bernard Madoff is terrible. But every day in this country, people lose money due to financial fraud or negligence. Innocent investors who bought stock in Enron lost millions when that company turned out to be a fraud; nobody made them whole. Half a dozen Ponzi schemes have been discovered since Mr. Madoff was arrested in December. People lose it all because they start a company that turns out to be misguided, or because they do something that is risky, hoping to hit the jackpot. Taxpayers don’t bail them out, and they shouldn’t start now. Did the S.E.C. foul up? You bet. But that doesn’t mean the investors themselves are off the hook. Investors blaming the S.E.C. for their decision to give every last penny to Bernie Madoff is like a child blaming his mother for letting him start a fight while she wasn’t looking.

Sound familiar? It’s victims as partial contributors of their demise.

Under Nocera’s theory, are those of us who’ve lost our retirement savings victims, too?

(Recommended reading: Tonight’s NewsHour on PBS looked at the role of the business press in covering the meltdown, including the assertion that stories were covered, but ignored.)

  • http://www.panopalo.wordpress.com AndyMN

    Hmmm. I think calling them ‘accomplices’ is a bit harsh, but I understand that the most cynical of us would probably repeat that claim.

    It doesn’t, or shouldn’t, diminish the fact that all of these people were defrauded. That’s the crime he pleaded guilty to…not that there’s a sucker* born every minute.

    *not calling these people suckers, by any means

  • Catherine Sheehan

    I’m just an amateur investor, but I’ve always been told to never put all my money in the same place or with the same company. The word “diversify” has always been my mantra. Maybe investors should be hearing that word more often when investment counselors are on TV or radio.

  • Mike

    I feel empathy for the fraud these people experienced, and sure the government may have been “asleep.”

    To me, though, they were active and willing participants when they were collecting unrealistic returns on their investments. Weren’t they being promised returns in the 15% per year range for year after year? Even a novice investor like me could see warning flags in those types of returns.

    I can feel bad for them, but there’s more than enough blame to go around…like 65 billion of it.

  • Paul

    Behind every recession is a corporate/white collar crime wave, and this recession is no different. Does this really surprise anyone?

    Let’s be honest, it wasn’t just the financial media i.e. CNBC that ignored/missed the warning signs-story whatever you want to call it. I hate to say it but through out 2008 NPR and MPR repeatedly had financial types on that issued the same advice the guys on CNBC were dispensing. The folks MPR had on did it with a different tone, but it was the same- put your money in for the long term-don’t change your strategy-the markets go up and down line, and as I’ve said here before that advice to the extent that it was followed cost americans trillions of dollars.

    I don’t know where to draw the line as far as culpability is concerned, and some “new” outlets may be more “involved” than others. But if you don’t think there was/is a concerted organized effort to get americans to put their money in the stock market you need to wake up and smell the coffee. And if you don’t realize that the “news” media plays a roll the effort that recruitment effort, likewise, there must be a Starbucks nearby.