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September 3rd, 2009
08:37 AM ET

Dear President Obama #227: Regulators – weakened at Bernie's

Reporter's Note: President Obama has talked about the need for much more serious efforts by federal regulators, especially in the financial markets. The subject of my daily letter.

Tom Foreman | Bio
AC360° Correspondent

Dear Mr. President,

The Securities and Exchange Commission watchdogs may have just captured the Doctor Obvious Award for 2009. I know it’s still early in the year and there are always strong contenders in DC, but seriously…this new report that says the SEC missed earlier opportunities to nail Bernie Madoff is like saying the Titanic had a damp basement.

The litany of warnings to which the SEC turned a blind eye in the Madoff case is mind-blowing. The path to prosecution could not have been clearer if it had been painted on the Capitol Dome beneath a fireworks display while George Thorogood belted out Bad to the Bone with Ben Bernanke standing behind him in a hula skirt, playing sax. The road to Madoff’s end could not have been more apparent if it had been tattooed on the forehead of each and every SEC commissioner, and surrounded by a set of blinking LED piercings. If a lunatic dressed in a white robe, with a flaming crown and a tambourine awoke the commissioners every morning by running through their bedrooms with a sign that said, “INVESTIGATE BERNIE TODAY..” well, I’m sure you get my point.

Here’s what the report, won’t say however: The reason Bernie Madoff was not investigated earlier is the same reason the wealthy and powerful who are suspected of wrong are seldom investigated as soon as they ought to be. It’s because other people who are wealthy and powerful, including the power brokers in DC, are hesitant to rock the boat for their peers.

Often folks like to say that others dislike the rich purely because they are rich. It’s just jealousy, as the Crane brothers would put it. But I think what makes average Americans furious is the double standard. They are angry that the Bernie Madoff’s of the world can run around pulling off the most outlandish rip-offs imaginable, and the agencies charged with maintaining rules, and law and order in our society sit there smiling at the cocktail party.

Much has been said about the need for federal regulators to do a better job in the wake of the housing crash, the market troubles, yadda yadda yadda. Here’s my advice: If you don’t break the culture of the powerful supporting each other, and government officials cowering in front of the wealthy, you’ll never get there. What you’ll get is more reports explaining how the horse mysteriously ran away, while the barn door keeps flapping in the breeze.

Busy, busy day here. You too? I suppose that’s why you haven’t called, but if you get a moment, I’ll be up late.

Regards,

Tom

Follow Tom on Twitter @tomforemancnn.

Find more of the Foreman Letters here.

soundoff (9 Responses)
  1. TMoz

    Madoff would have been exposed years ago if he had been required to get audited. Ask yourself why audits are not required for such firms.

    Remember, somebody "got the government off our backs", and this is the result.

    September 3, 2009 at 4:46 pm |
  2. Anonymous, Minnesota

    Dear Tom,

    I think you are right. We need to separate the government from the wealthy (we'll call it "separation of 'the wealthy' and state"). However, figuring out a way to do this could be a problem.

    - I can just hear it now "TAX THOSE RICH PEOPLE TO DEATH!" then they won't ever use their money to bribe or coerce government officials AGAIN! No, that's not the answer.
    - How about uncorrupt politicians... *laughs* no.
    - Prosecute the rich who donate money? No.

    Who knows? Not me.

    September 3, 2009 at 12:43 pm |
  3. Heather,ca

    Love the title.

    September 3, 2009 at 12:23 pm |
  4. Jazzy Fresh

    It is refreshing to see someone express their frustrations in a sarcastic yet continuously respectful manner. As for our government there are days that I feel there is simply no hope. The rich will always get richer and their peers will always pretend not to notice. The SEC should be punished for NOT doing their job in a timely fashion. However the question then becomes, who will punish them when all of D.C. has the same code of ethics; "We all turn a blind eye".

    September 3, 2009 at 12:15 pm |
  5. Donna Wood, Lil' Tennessee

    Here, here Tom! Yep, the SEC had thier chance and they blew it. No use crying over spilled at this late date. As for the wealthy and powerful not wanting to rock one of thier own's boat, well think about this, it could be your millions somebody says ooops! with next time. Do you really want to back a lame horse like that? I think not! You need to start cleaning up your backyards guys, they're looking a little cluttered!

    Donna Wood
    Lexington, Tennessee

    September 3, 2009 at 10:43 am |
  6. Steve

    What about Christopher Newsom and Channon Christian? Anderson Cooper 360 must do a large segment on this story. This is crazy what happened. Is there any justice or sanity left in America?

    September 3, 2009 at 10:10 am |
  7. zehfilardo

    Tom,

    Don't you think that the investors should sue the Govmnt for responsibility "in vigilando"?

    September 3, 2009 at 10:09 am |
  8. RLWellman

    This is a good reason why the whole Congress and House of Representatives need cleaned out. Our representatives have become too good of friends with the high and elite. They themselves believe they are in the same boat and don't have to follow the same laws they make for us.
    It's time this changes. They need to follow the same laws. They need to have their retirements taken away and be put on social security like us. They need to start representing us, not trying to get more power over us. Wake up America, read what they are trying to pass over on us!

    September 3, 2009 at 9:25 am |
  9. Sylvia

    Please ask an attorney if Congress can't bring charges against the entire SEC – all of the commissioners and ex-commissioners who looked the other way - for dereliction of duty or malfeasance or fiduciary irresponsibility or some other federal charge. The evidence is so obvious, I hope this matter won't be dropped with a pro forma "slap on the wrist."

    September 3, 2009 at 9:19 am |