City Desk

Wall Street Journal Passed Up Madoff Story

Gary Weiss has a helluva post up at his blog: In his prepared testimony, Madoff whistleblower Harry Markopolos says that he told Wall Street Journal investigative reporter John Wilke three years ago that there was something fishy about Bernie Madoff. But according to Markopolos, WSJ editors wouldn't let Wilke follow the story.

Weiss has a lot to say about the WSJ's failure to act, and sorta kinda suggests that Madoff would've been found out sooner had the WSJ put Wilke on the story back in 2005. But then, the Journal isn't the only financial rag in town, and its reporters knew for quite a while that the mortgage industry was in trouble, and yet it took a $700 billion bailout for Wall Street's implosion to get top billing. (It is interesting to think of journalists as pre-emptive agents, but the evidence says we're much better at reacting.)

But whether or not Madoff could've been apprehended sooner is a middling concern compared to the costs of repairing the damage he did. His most high-profile casualty, after that guy who committed suicide after finding out he'd lost everything, is the Brandeis University's Rose Art Museum, which the university's board of trustees is trying to liquidate in order to make up for a shortage of alumni donations, most of which were sucked into Bernie Madoff's black hole.

(H/t to Jay Rosen)

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  • Cindy S

    I'm one of many volunteers for just one consumer org that was warning for years that corporate greed and fraud, shoddy new home construction, rights-stripping arbitration clauses in contracts and warranties, mortgage fraud, predatory lending, etc, was causing immense harm to Americans. I guess consumer advocates and bloggers are considered non-credible sources of such warnings, but the warnings were accurate, and a few years ago the FBI and many economists also warned. E.g. in about 2004 the FBI reported that most mortgage fraud was done by the industry itself and was so rampant it could take out the economy. No reaction from the govt was forthcoming. The IRS warned that down payment assistance programs were often times scams and were contributing to artificial price inflation and foreclosures. Congress finally banned them in 2008 but the building and realty industires are lobbying to revive them already!

    Regardless of who did the warning or how well substantiated it was, mainstream media was too scared, bought-off, or disinterested to cover it well in most cases. The govt turned a blind eye because most elected officials get monetary contributions from corporate special interests that are involved in wrong-doing, unethical practices, etc. Corporations also want no accountability for their actions and spend millionns annually to lobby our elected officials for that end.

    We consumers are the last people the govt or media listens to. Even as consumers were filing complaints about mortgage fraud, they were ignored, told to "just get a lawyer and sue," a highly impractical and unaffordable answer. When banks got burned by the same scams, "predatory" lending was renamed as "fraud" but the action came to late to avert the meltdown.

    Had we been listened to, I believe this economic meltdown could've been averted. Instead, the govt is now crafting a bailout, at our expense, for the very industries that created the problem. I think we need to clean house in DC and start over, starting with severing the tie between corporate special interests and OUR elected officials. Our group has volunteers that went at their own expense to speak to elected officials on behalf of consumer protection. Each of these industries lobbying for a bailout spends millions annually to court our elected officials. That has to stop or we won't see any change.

  • James Raider



    ….in his own words? Now get the subpoena requests out.

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