Bernie Madoff’s criminal piggery and the Obama pay caps

If you didn’t see last night’s “Frontline” piece on Bernie Madoff on PBS, take a look. While the show doesn’t add much factually to what we’ve already gleaned from print coverage since December, seeing and hearing feeder-fund big shots, former SEC chairman Harvey Pitt and assorted Madoff employees and victims is quite illuminating.

If you didn’t see last night’s “Frontline” piece on Bernie Madoff on PBS, take a look.
While the show doesn’t add much factually to what we’ve already gleaned from print coverage since December, seeing and hearing feeder-fund big shots, former SEC chairman Harvey Pitt and assorted Madoff employees and victims is quite illuminating.
I came away with several impressions. First, it will be difficult to take seriously any Securities and Exchange Commission pronouncement for quite some time. When caught on camera, many of the agency’s former leaders didn’t even realize that they were coming off as pompous, self-righteous windbags.
And the fact that they missed the scam for so long, despite clear indications that something was amiss, just shows that smug Ivy League lawyers aren’t as brilliant as they think they are.
The swank Swiss bankers and worldlier-than-thou European gazillionaires who eagerly gave their francs and euros to Bernie’s salesmen come off looking as grubby as Russian oligarchs.
And the heads of the “advisory” firms who funneled money to Madoff (and I put “advisory” in quotes because their advice was a joke) come off even worse. Their willful ignorance of everything fishy about the Madoff operation — from paper statements only, to insistence that all the firms remain mum about the Madoff-bound money, to the two-bit accounting firm that audited Madoff’s books — show that money pouring into your pocket douses any curiosity as to its provenance.
I must admit, watching the rich and famous take a public shellacking didn’t elicit much sympathy from this working stiff (although I feel terribly sad for all the charities and schools and individuals who got snookered by Madoff because their “advisory” firms steered their investments to the crook).
Yet I’m afraid this same schadenfreude toward poor pitiful rich people will propel support for President Obama’s move to cap executive compensation in the financial services industry.
Mr. Obama is a clever politician when it comes to reading the public’s mood toward the CEOs of giant financial companies, which now seems to be, “Those pigs got us into this mess, so why shouldn’t they suffer?”
There’s not doubt that executive pay, especially on Wall Street, has been ridiculous. No human being on earth is so unmotivated that they need the incentives these gluttons have managed to engineer for themselves. But as much as I like knocking the undeserving ultra-ultra-rich from their pedestals, I don’t want the government to punish them or set their pay.
Government intervention will only drive us closer to third-world thugocracy. It won’t solve the real problem behind excessive executive compensation: institutional investors’ abdication of their responsibility to rein in CEOs, who now, effectively, run their own kingdoms and set their own compensation for however long they are in power.
Ownership interest, not political favoritism, should be the determiner of executive pay. But given the meekness of most institutions and the recent spate of financial high crimes and misdemeanors, it’s not surprising that the Obama team has seized this hot-button issue and is running with it.
So thanks a lot, Bernie. Your criminal piggery not only has ruined the lives of thousands of people today, it will likely poison the environment for many years to come.