At last, everyone is hearing Cassandra out. The doomed prophet has taken modern shape in Harry Markopolos, the Boston accountant who blew the whistle on Bernie Madoff. The SEC ignored him. Now Congress listens.
Markopolos testified this morning before the House Financial Services Subcommittee, telling members how he delivered details on Madoff's $50 billion Ponzi scheme to SEC regulators in 2006 but was ignored. The agency is overlawyered and understaffed, and is rife with "financial illiteracy." One SEC regulator he spoke to could not grasp his basic argument — that there was no way Madoff could execute his stated options-trading strategy based on the actual volume of options trading on the market. The agency was afraid of prominent industry leaders like Madoff, who once chaired the Nasdaq, Markopolos charged. It "roared like a mouse and bit like a flea." His testimony, via MSNBC:
Markopolos wants Congress to revamp the SEC. A sensible request, given its performance. But in asking this, he will likely prove another unheard prophet. In good times, we never want to listen to the sagest of warnings. Congress can restructure a government agency. But can it change human nature?