Bernie Madoff Shocking Reflections on Corruption From Prison


Today in Forbes, Diana B. Henriques, the biographer of Bernie Madoff, released excerpts from a long email conversation she has had with Bernie Madoff since he was imprisoned. She explains how Madoff, after going to jail, has been stricken with loneliness and so has reached out to her to “set his story straight,” a common impulse among those looking back at misdeeds of historical proportions.

Before looking at Madoff's comments, it's worth thinking a little bit about the back story, the meta-story. How did Henriques gain Madoff's trust – become a listener for his ranting – and then turn around and write things like, “Whatever his motives, he displays the same talent for manipulation, deception and delusion that served him so well in his criminal life”? Did Madoff communicate with her knowing that she would use all his answers as primary source material? He probably knew that much, but I guess there is no better evidence of his delusive nature than that he thought she would somehow put him in a better light.

In any case, the main point of Henriques’ article is that Madoff became obsessed with blaming others for their greed – for buying into his greed: 

Oct. 11, 2011, 7:36 a.m. … I will never get over the distortions being presented by everyone as to the poor and now homeless when in fact they all signed documents when opening their accounts that they were sophisticated and had enough wealth to withstand the possible losses of short term trading. I wish I had saved the hundreds of letters I received thanking me for how I was responsible for their happiness over the years and their pleading with me to keep their accounts open when I tried to close them.”

Crucially though, there is a philosophical point here, which is the way that one's own weaknesses tend to surround and creep into one's very perception of reality. This is not metaphor. Scientists and philosophers of perception have been studying for years the ways in which what someone believes explicitly manifests into their overall perception. Quite literally, what we see is influenced by what we already think (Here is a summary of the issue). One example is the duck/rabbit picture. You can see either depending on what's “on your mind.”

Thus, we can see the ways in which Madoff is living under a pile of perceptions, emotions, and intuitions that are so striking to an outside observer. Every once in a while, though, he emerges from this conceptual avalanche of greed. Here he's being momentarily contrite:

“The reality is that for 30 some years I was successful earning substantial, legitimate profits for everyone. Then I did allow myself to be put into a terrible financial situation because of a few trusted clients. This was my own ego and weakness to please that has always been my nature. I can blame no one but myself for allowing this to happen.” 

It's quite poignant in that it points to the way that wrongdoing can become institutionalized in the deepest possible way, and how powerful a routine and a “way of doing things” can become. 

Enter former Goldman Sachs executive Greg Smith, who wrote his scathing New York Times Op-ed last week explaining what he thought had become of the internal culture at Goldman Sachs. 

Rather than a moment of a single person (Madoff) glimpsing the system he had created, Smith's Op-ed represented an institution getting a glimpse itself – seeing its own modus operandi. Here's Smith:

“These days, the most common question I get from junior analysts about derivatives is, ‘How much money did we make off the client?’ It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about ‘muppets,’ ‘ripping eyeballs out’ and ‘getting paid’ doesn’t exactly turn into a model citizen.” 

My point is not to pick on banking and GS, rather my point is that institutions conceived broadly – institutions as a way of doing things – tend to create complicity in those that participate in them. The results are disastrous and the only antidote is continual scrutiny. This leads me to a point about institutional design. Too much criticism of people and institution is, en masse, much better than too little, because the forces of complicity, greed, and weakness, already have a massive advantage. Humans are biased to the status quo already, and this bias is exacerbated by the daily patterns we enter into which turn off the parts of our brains concerned with fairness and authenticity. 

Photo Credit: Wikimedia Commons