Bernie Madoff was bigger, more brazen, and more remarkable, because of his capacity to survive. But he was not unique. He epitomizes an “era of irresponsibility.”

Question: Is Bernie Madoff emblematic of our era, and if so, what about our era gave rise to him?

Eliot Spitzer: Well, there have been Ponzi schemes throughout history. He was bigger, more brazen, more remarkable, because of his capacity to survive, even when the SEC had supposedly taken a hard look at him on numerous occasions. So, yes, I think he will become – his name alone will come to typify and capture an era of irresponsibility and lack of allegiance to simple principles of integrity in the marketplace.

Now, he also stands for the abject failure of the SEC. During my years as Attorney General, I was very critical of the SEC because it didn’t make sense that the Attorney General of New York was bringing the sorts of cases that we were bringing. The SEC should have been there doing what we were doing, but they were both ideologically opposed and actually intellectually incapable of doing what they were supposed to do. There was a lethargy, there was a hesitancy, there was a failure of intellect that was hard to get my arms around. When Harvey Pitt came in as Chair of the SEC, he said to the world, to the investment bankers, he said, “You will find a kinder, gentler SEC.” And that’s ridiculous. I said to him, “We don’t want a kind and gentler enforcer of the marketplace. We want somebody who is fair, but rigorous, tough, and understands how to ensure integrity in the marketplace.” But that was typical of what began with President Reagan, and it continued through President Bush, and so we needed to unwind that failure of regulatory backbone.

Question: Why did Madoff elude the Attorney General’s office as well as the SEC?

Eliot Spitzer: We were doing everything we could. We brought the systemic cases against analyst’s insurance, mutual funds, on and on and on. I’d never heard Bernie Madoff’s name. I wish I had, I wish we were aware of him. Had anybody sensible taken a quick look at his structure, you would have realized, a) the trades he pretended to have made simply couldn’t fit within the market space he was talking about, and have you even looked to see, and had said, I want one day of trading records and then I want know who your custodian is. Who actually keeps these shares? You would have found out the whole thing was a scam. So, it would have been the simplest investigation in the world. I just – we never heard of him.

Recorded January 21, 2010
Interviewed by Austin Allen