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FRONTLINE: The Madoff Affair
Last week, hedge fund manager Bernard Madoff was sentenced to 150 years in prison after pleading guilty to eleven felonies including securities fraud. The Ponzi scheme that he operated with a hedge fund as a front defrauded investors of approximately $65 billion. The loss of this money has forced charitable foundations and smaller investment outfits to shut their doors, cost hundreds of lost jobs, damaged the American financial system, and led to the suicides of Madoff's clients. The reverberations are still being felt, as domestic and foreign banks either shut down or go under drastic reorganization as a result of investments lost to Madoff.
The implications are, in some ways, as far-reaching and drastic as the collapse of Enron. Except that in this case, the key decisions were not made by a group of executives and Board of Directors, but by one man.
The Madoff Affair is a one-hour episode of PBS's excellent investigative documentary series Frontline. The show chronicles the rise and fall of Bernard Madoff and the development of his notorious Ponzi scheme. We are given a brief biography of Madoff in his early years, a fairly in-depth view of the beginnings of his dubious career as an investment advisor, and an overview of his hedge fund years and recent downfall.
This program covers fascinating territory, and includes interviews with former Madoff colleagues, investigators, journalists, and a few defrauded clients. The strangest and most entertaining participant is the outspoken, effervescent Michael Bienes, a one-time CPA who funneled money invested with his sideline advisory business to Madoff. He comes off as somewhat unreliable, but his oddest statement comes at the opening of the program, when he reveals that his first thought upon hearing of Madoff's December 2008 arrrest was, "Sex crime!" This assumption is not elaborated upon.
We go on to hear of Madoff's predilection for secrecy, and the baffling testimony of those who, for one reason or another, did not question it. We are told of powerful investment firms who trusted Madoff with huge sums of money, but who did virtually no "due diligence" in verifying how exactly their funds were being handled. We learn of filings made with the Securities and Exchange Commission by individuals who were suspicious of Madoff's consistent ability to make money, even in bad economic weather, and which were either ignored or insufficiently investigated.
What this program does not do is delve into the connections Madoff had with Washington lawmakers and regulators that may have allowed him to evade official detection for literally decades. These connections have been heavily reported in the print media, but are not mentioned here. This issue raises some of the most vital questions about the various financial scandals of the past decade. In particular: To what extent does the private financial sector have a hotline to federal regulatory agencies?
Americans love specialists and specialization. They are obsessed with experts and the concept of inside knowledge. So when Hank Paulson, former CEO of Goldman, Sachs, is made Secretary of the Treasury, nobody blinks. Paulson is so inside, so of the financial industry - he must be right to keep an eye on it. Right?
I am not attempting to cast aspersions upon Paulson in particular. I only use him as an example to illustrate the point that we are often too ready to trust "experts," who are so knowledgeable about their business that we may as well not even bother asking any questions. This, at least, was the attitude of Madoff's investors; this was also the attitude of millions of people who signed mortgages they couldn't afford. If the regulatory agencies meant to curb illegal behavior in financial markets are populated by Madoff's and Ken Lay's industry colleagues, by people who have spent some part of their adult lives working in financial markets, which generally consists of trying to make money by moving around other piles of money (sometimes hoping that no one notices where exactly those piles are at a particular moment) - then where does this take our financial system? I don't have answers, but I was hoping that this program might spend some time trying to suss them out; in an hour, I suppose that was not feasible.
The other topic the program doesn't examine is the question of where the money invested with Madoff went. Virtually nothing on this subject is discussed. I understand that the answer is still being sorted out, but some brief overview of the evidence would have been helpful.
The single disc is housed in a standard keepcase with the usual PBS and Frontline artwork.
The image is anamorphically-enhanced and presented in its original 1.78:1 aspect ratio. This program is brand-new, originally broadcast on May 12 of this year. The image is crisp, although the blacks are a bit funky in places. Overall, a fine presentation.
A simple, serviceable 2.0 stereo mix is provided. Music is subtle, and the dialogue is appropriately clear.
Although it could have easily been expanded into a multi-part presentation, this episode of Frontline provides a good overview in broad strokes of the Madoff scandal. Interested viewers can certainly follow up online by checking out the great reporting that's being done on this story by the Wall Street Journal, the Financial Times, and the New York Times. Recommended.