Readers outraged by Madoff scandal's damage - Fall-out from Madoff fraud to hit big banks

Readers outraged by Madoff scandal's damage
Some equate deeds to murder, call for his death; others say he should live out his life in poverty

Published on Monday, Jan 19, 2009

Roy Bean, the famous ''hanging judge'' of Texas, would be disappointed.

Most of the 3,000 readers who wrote in response to my recent column said that hanging is too good for Bernard Madoff. The same column asked readers to suggest the appropriate punishment for a crime so large.

Madoff is the alleged mastermind of a $50 billion fraud, a Ponzi scheme that left thousands of investors and many charitable foundations penniless. The dollar value of the crime is equal to three full years of all crimes against property in America — every larceny, burglary and auto theft. That's about 30 million common crimes.

It boggles the mind.

Here is what I've been able to distill from the 3,000 reader notes.

• We're mad as hell and we're not going to take it anymore.

I simply can't print some of the suggested punishments. They are too violent. Imprisonment at Guantanamo or Abu Ghraib was mentioned frequently.

I believe we're at the beginning of something as powerful as the civil-rights movement or the protests against the Vietnam War. The difference is that this public anger is far broader. Unlike the civil-rights movement or protests against the war in Vietnam, this anger is harder to funnel into programmatic goals or civil action.

But Bernard Madoff is the $50 billion last straw. Hundreds of readers made leaps of association to corporate white-collar crimes, such as Enron and WorldCom. Or to colossal institutional influence such as that wielded by Fannie Mae and Freddie Mac. Or to anger against executives being rewarded with multimillion-dollar payments even as their firms collapsed. Or to political ineptitude and corruption. Several politicians were mentioned more than once. U.S. Rep. Barney Frank might be the next Dan Rostenkowski. (Former Congressman Rostenkowski, head of the powerful Ways and Means Committee, was surrounded, heckled and nearly attacked by outraged senior citizens in 1989.)

Many readers made the leap from a criminal Ponzi scheme to the equivalent by government. One reader suggested that Congress easily topped the $50 billion fraud, and did it annually, by putting IOUs in the Social Security trust fund and spending the surplus employment tax receipts.

• Enforced poverty might be the new
punishment.

Few readers felt that conventional white-collar imprisonment was appropriate for a crime this large. One pointed out that Jeffrey Skilling's sentence for Enron was nothing compared to the damage done to thousands of workers' lives. People are looking for something tougher and more visceral.

Many suggested that Madoff and every member of his family be stripped of all wealth. Beyond that, many suggested that Madoff be forced to live with, and serve, the poorest people in our society. One reader wrote that white-collar criminals should be forced to learn what real poverty means. She suggested cleaning toilets at a homeless shelter, for life.

• We might soon have a financial ''equivalency'' for murder.

People feel it isn't right that a man can get five or 10 years in prison for robbing a 7-Eleven when a white collar crime can be more devastating to more people, but get a lighter sentence. One reader wrote: ''You can kill someone in one of three ways: physically, emotionally or financially. But only one is punishable by death.''

We'll be a long time figuring out the equivalents, of course, but if employers can talk in terms of ''full-time equivalents'' for jobs, it isn't far-fetched to imagine that modern white-collar crime might soon be seen as a new form of mass murder.

Some readers will think this is an extreme statement, so let me explain. The highest figure I could find for the value of a human life was the amounts paid out to families that suffered a loss from the 9/11 terrorist attacks. According to a 2004 study by the Rand Corp., the compensation for the average victim was $3.1 million. This is a very large multiple of more common exercises attempting to estimate the value of a human life. Yet even using this gigantic figure, the $50 billion fraud is the financial equivalent of destroying 16,100 lives.

Personally, I'm not a fan of the death penalty. As I wrote a few years ago, I think we need to buy Devil's Island from the French and let our big cons try to survive in an island society of their own making.

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