MADOFF'S INVESTORS: VICTIMS? HOMEOWNERS CROOKS!!

[Don Allen]

Okay, so if I'm told I'm special and one of the select few allowed to invest with the famous Bernie Madoff, and reap the 18% annual return for the last ten years on the millions I entrusted to Mr. Madoff, without questioning the practices of Mr. Madoff, I 'am a victim of crime. I should be felt sorry for and something should be done to help me get my money back, even though, truth be told, I didn't give a shit how Madoff made me money as long as I seen 18% on my statement.

Okay, but those dirty bastards who bought homes with sub-prime mortgages in hopes that they might get re-financed at lower rates when their mortgages reset are dirty crooks who have contributed to the downfall of our country and should live in their own excrement for the rest of their lives.

THEY SHOULD HAVE KNOWN BETTER, THEY SHOULD HAVE READ THEIR CONTRACTS.

Poor Bernie Madoff investors, trusted Bernie to do the right thing. Those fucken homeowners should have know better. Bernie Madoff investors lost everything, boo hooo hoo. Piss on the homeowners that lost everything, they deserve what they get because they were toooo stupid to read the contract...

Tough to be a homeowner I guess, maybe would could all pitch in and help the Bernie Madoff investors to maintain their standard of living.

[icerose]

Huh?

Where did this rant come from?

[Bravo]

stop questioning the market, don.

[Don Allen]

stop questioning the market, don.


LOL, I know Bravo, I know, it's way to complicated to understand....

[Don Allen]

Huh?

Where did this rant come from?

I'm watching T.V and listening to these "victims" talk about how they lost everything, then watch another segment where homeowners are blasted as being stupid for taking sub-prime loans, and just scratching my head at the hypocrisy....

[Don]

Yep, both were equally stupid, and deserve to be blasted equally.

On a nearly related topic, I heard a bit of some talk radio on the way back from the vet this morning. The question was asked:

"What's the difference between what Madoff did and what the Social Security Administration does?"

I didn't get to listen to the answers for long, but all I heard was crickets. :roll:

[Monkey]

NPR had a segment a while back about a woman, an artist, who was able to live off the money she pulled in with her sculpture because she also had a nice bit coming in from a Madoff investment.

She said that she was utterly clueless about investing, but "people who knew" had refered her to Madoff, and she didn't even try to keep up with the intricacies of it because she just couldn't. The legal, Wal-Street mumbo-jumbo left her flabbergasted.

So she fell prey to a scam.

Many of the people given sub-prime loans were probably in a very similar boat. They want a home, so they go to the bank. The nicely dressed and oh-so-friendly person behind the desk tells them not to worry--they can have a loan. All they have to do is sign here, here, and here. They can take the papers home and review them at their leisure. Sure, the payments are a little high, but that will go down over time, as the loan is payed off and the interest gets smaller, right?

*sigh*

I see the similarity. The difference, I think, is that 1) the banks will answer questions if you ask, and 2) if you follow your contract, even if your contract is woefully unfair and hard to follow, you'll win, in the end, with the banks. The people who fell victim to Madoff don't have that option.

[Don Allen]

*sigh*

I see the similarity. The difference, I think, is that 1) the banks will answer questions if you ask, and 2) if you follow your contract, even if your contract is woefully unfair and hard to follow, you'll win, in the end, with the banks. The people who fell victim to Madoff don't have that option.


They may not of had an option, but they did have the responsibility to keep track of their investments, the genius of P.T Barnum never fails to amaze me.

[Monkey]

Keeping track of your investments is way the hell harder than it sounds. I can see how some people would be overwhelmed, and Madoff was intentionally preying on them.

On the other hand, with any investment, you stand to win some and to lose some. These people "won" more than was natural--some of them for a very long time. So in the end, they lost big. I can see how that could be seen as less tragic than the homeowner who didn't understand (or mistakenly thought they could handle) their loan.

For me, the question comes down to how predatory Madoff/the bank behaved.

[blacbird]

For me, the question comes down to how predatory Madoff/the bank behaved.

With Madoff, there's no longer any doubt. With the banks/lending institutions/financial advisors, it's a spectrum, though almost all of them seem to have been at best clueless, and willing to keep their individual investors that way as much as possible.

But Don (Allen's) point in the OP addresses a fair amount of the commentary made here that either implies or baldly states that all the blame should be placed on stupid/lazy/greedy homeowners.

The financial system has fallen apart to a significant degree because it was, ultimately, based on some level of trust. Which it had to be. The predators took full advantage of that over a period of twenty-odd years, in an escalating, ever-riskier manner. Yeah, a lot of people proved gullible. But you can't be swindled without a swindler. Why are so many eager to load the blame on the swindled?

For the economic system to recover, it will need to recover at least some of that trust. Right now, nobody trusts anybody, at all, with justifiable if somewhat irrational reason. And I don't think we've yet seen the end of the Madoffs and Stanfords in this saga, let alone those financial gurus who took legal advantage of lax standards and laxer enforcement of them.

caw

[Don Allen]

With Madoff, there's no longer any doubt. With the banks/lending institutions/financial advisors, it's a spectrum, though almost all of them seem to have been at best clueless, and willing to keep their individual investors that way as much as possible.

But Don (Allen's) point in the OP addresses a fair amount of the commentary made here that either implies or baldly states that all the blame should be placed on stupid/lazy/greedy homeowners.

The financial system has fallen apart to a significant degree because it was, ultimately, based on some level of trust. Which it had to be. The predators took full advantage of that over a period of twenty-odd years, in an escalating, ever-riskier manner. Yeah, a lot of people proved gullible. But you can't be swindled without a swindler. Why are so many eager to load the blame on the swindled?

For the economic system to recover, it will need to recover at least some of that trust. Right now, nobody trusts anybody, at all, with justifiable if somewhat irrational reason. And I don't think we've yet seen the end of the Madoffs and Stanfords in this saga, let alone those financial gurus who took legal advantage of lax standards and laxer enforcement of them.

caw

WOW! You said that so much better than me I feel like shit, but thank you anyway...

[Don Allen]

I'm half listening to Fox while doing some taxes and they keep interviewing the Madoff victims, and,,, I don't mean to be totally unsympathetic, my God these people lost their ass, and I get that, but this one guy says, "these aren't rich people, they're everyday guys who worked all their lives and invested 1 to 2 million dollars with Madoff.

I'm sorry, but everyone i know has worked all their lives and none has 1-2 million to hand over to an investment broker.... But I do know a bunch of criminals who took out sub-primes to buy a house...

[donroc]

A million dollars can be viewed as a lot or little depending upon perspective. When I did the autobiography of an entrepreneur worth 500 million to a billion, I heard eight and nine figure amounts tossed around so much that a million began to seem like chump-change -- the way Congress thinks about a billion -- except when deciding who is rich -- then $250,000 seems to be too much.

[robeiae]

Personally, I feel bad for both groups to some extent. Doesn't mean I should foot the bill--in whole or in part--to save them. Sorry.

But you know, the Madoff investors WERE greedy, imo. They were looking for easy money. And--contrary to how he is sometimes portrayed--Madoff was a fringe investment guru. The people going to him were going to someone that was talking down standard investment strategies and promising something "special." It was special, alright. But really, he might as well have been an infomercial guru, 'cept he had access to bigger clients. So in a way, his investors got exactly what they were promised. It's still sad and its still illegal, of course.

As to the people that got into bad mortgages, in all most all cases the numbers and terms were there to be seen and read. However, I think it is fair to point out that many mortgage brokers didn't do much of a job explaining either, and they were--oftentimes--dealing with people that really needed to have both explained in layman's terms. That said, the old adage remains correct: if something seems to good to be true, it probably is.

And still, I blame the Federal Government for enabling this, for setting unrealistic expectations on things like home-ownership rates, for pushing for the extension of credit, for allowing the creation of questionable financial vehicles, and for--in general--putting everything in legalese.

[blacbird]

As to the people that got into bad mortgages, in all most all cases the numbers and terms were there to be seen and read. However, I think it is fair to point out that many mortgage brokers didn't do much of a job explaining either, and they were--oftentimes--dealing with people that really needed to have both explained in layman's terms. That said, the old adage remains correct: if something seems to good to be true, it probably is.

And still, I blame the Federal Government for enabling this, for setting unrealistic expectations on things like home-ownership rates, for pushing for the extension of credit, for allowing the creation of questionable financial vehicles, and for--in general--putting everything in legalese.

I pretty much agree with everything here, with the addendum that the government enabling took place largely at the behest of the big-scale private financial cabal, who spent billions of dollars in hard-sell lobbying for it, and got what they paid for. It isn't like the Feds just invented all these questionable rules and procedures and wild-west investment schemes out of a whim.

This crap dates directly back to the Keating-Milken-Boesky days of the 1980s, the days of the explicitly-expressed "greed is good" philosophy. Junk bonds got replaced with hedge funds and "derivatives" (god is that ever a nebulous word), cut from the same ream of paper.

And it isn't like the Government forced everything into legalese. I'm right now organizing a bunch of financial statements straight from several investment firms, and they're all in the finest legalese you ever done seen.

caw

[Bird of Prey]

I'm watching T.V and listening to these "victims" talk about how they lost everything, then watch another segment where homeowners are blasted as being stupid for taking sub-prime loans, and just scratching my head at the hypocrisy....


A friend told me that a woman she grew up with lost her entire inheritance to Madoff. What's interesting is the woman would not divulge the name of her miracle working money manager to my friend. She claimed that my friend didn't have enough money to invest at "that level."

Guess not. LOL!!

[Don Allen]

A friend told me that a woman she grew up with lost her entire inheritance to Madoff. What's interesting is the woman would not divulge the name of her miracle working money manager to my friend. She claimed that my friend didn't have enough money to invest at "that level."

Guess not. LOL!!


Yeah, what bothers me a bit here in the empathy department is the same when pro athletes go on strike and want the average union guy to support their walkout. Some of these people want the sympathy of a victim now that they got ripped off, but sure didn't want to share the name of their guy when they were making money. I do think it's a tragedy that this happened, but a lot of these same people railed against more regulations and have screamed for free enterprise. Now they are screaming that the sec didn't do enough to protect them. So the theory goes, "less government when I'm making money, and where the fuck is the government when I get ripped off trying to make more money than the average fool." I guess.....

[Bird of Prey]

Yeah, what bothers me a bit here in the empathy department is the same when pro athletes go on strike and want the average union guy to support their walkout. Some of these people want the sympathy of a victim now that they got ripped off, but sure didn't want to share the name of their guy when they were making money. I do think it's a tragedy that this happened, but a lot of these same people railed against more regulations and have screamed for free enterprise. Now they are screaming that the sec didn't do enough to protect them. So the theory goes, "less government when I'm making money, and where the fuck is the government when I get ripped off trying to make more money than the average fool." I guess.....


Unfortunately, our financial system is in such a freefall that I doubt we can recover without a very hard leftist lurch toward nationalization.

The biggest problem Washington seems to have now is how to handle the real threat which is moral hazard, and still maintain a semblance of capitalism. In my opinion, it can't. The dye is cast. We've bailed out corporations that should have failed, funded exhorbitant and ill-deserved bonuses, left honest mortgage payers to foot the bill for their irresponsible neighbors, issued far more paper and borrowed far more than we can possibly manage without hyperinflation.

That leaves the honest, credit-worthy person eventually cornered into sticking his money under the mattress and/or becoming as dishonest as the parasites that caused this mess, and finding black market income or undeclarable revenue.

[Joe270]

I largely agree with both Blac and Rob have said thus far.

Poor Bernie Madoff investors, trusted Bernie to do the right thing. Those fucken homeowners should have know better. Bernie Madoff investors lost everything, boo hooo hoo. Piss on the homeowners that lost everything, they deserve what they get because they were toooo stupid to read the contract...

I do see a difference between the two groups. The Madoff investors had the money, cash money, which was stolen.

Most (not all, but most) homeowners in foreclosure didn't have much invested in the houses. Many had less in their down payments than they would have paid in rent for the home. I have heard of cases where people haven't paid their mortgage payment for over a year. Case in point:

http://www.lvrj.com/news/40918147.html

She says in 2006 she and her husband put a total of $50,000 down -- their life savings -- on a house they purchased for a little more than $500,000. About 3,400 square feet, it has five bedrooms and three bathrooms.

"They approved us for the loan, but my husband only made $39,000 a year as a supervisor at Pulte Homes," she says. "They told us we would have a $4,500-a-month house payment, and we said we couldn't afford that. But the loan processor said to sign, that we could refinance in six months to a much lower payment ... that the interest rate of 10.75 percent would go down."

However, a chance at refinancing did not come for several months, Rosie Adaoag says, and the payment only lowered to $3,800 a month.

"We took money from my husband's 401(k) and borrowed from many people," she says. "But we finally couldn't make any more payments last year. That's why we got foreclosed on."

Yeah, they were really stupid to think they could make $4000+ payments on an after-tax income of 32 grand. They have only 2800 a month or so coming in, no way.

But they got at least a year paying no mortgage in a huge house for 50,000 bucks. That's about ten grand less than the rent would have been.

So they haven't really lost anything.

I know lots of folks didn't put down the 10% like these people did, many only put down 5%.

Yes, the Madoff investors were stupidly greedy. That's pretty much a given. But I see the foreclosure people in a different light, more like the octomom, the 'I want what I want' sorta mentality.

Does that make any sense?

[Bird of Prey]

I really don't see much of difference between greedy and greedier, Joe.

[Joe270]

Agreed, Plot. As I prefaced my post, I agree with other thoughts on the matter, too.

I hoped to make a bit of a distinction, which is pretty clear to me. Some folks did have money which was stolen, the others got what they wanted for a short period before it came crashing down.

Hell, you could take that last paragraph and put either group in either sentence.

I don't know if I can make a clear distinction. I see the distinction, but I just can't express it well enough.

[Don Allen]

I find it sad that many have called these people who have lost their homes "Golddiggers" or in some cases crooks, for wanting a better life, but the Madoff investors or victims, though they pretty much wanted the same thing.

[Joe270]

I'm seeing your point because, for the life of me, I can't make a clear distinction.

It does seem to boil down to greed.

[Dommo]

For me it comes down to two things.

1. For the madoff people, it was people looking to make a lot of money without knowing how(e.g. get rich quick).
2. With the homeowners it was largely people living beyond their means. Not everyone needs a 2000+ square foot McMansion.

So for the first group it was largely greed driven, and the second was largely driven by materialistic foolishness.

Different situations, but both are stupid and the people who participated in both shouldn't be bailed out. When you invest you are taking a calculated risk, and if you can't afford to lose the money you probably shouldn't invest it in things that are possibly risky. With the homeowners, many of them should have understood the adage of living within their means. Some were possibly tricked into getting loans, but I think the majority were to caught up in the idea of having a huge house, to think of the financial consequences their decisions were going to have.

In any case, I'm going to be enjoying this overall situation as I currently don't own a house, and I'm just getting started working so the stock market is at the best price in years, so my 401k should be in good shape. I plan on buying up some property, possibly a cottage here in the upper peninsula that's now dirt cheap, and just renting for the time being as I'll probably be moving periodically.

[Joe270]

Different situations, but both are stupid and the people who participated in both shouldn't be bailed out. When you invest you are taking a calculated risk

Bingo, Dommo wins.

[Christine N.]

Yeah, I don't call the homeowners crooks as much as foolish. Neither seemed to be informed about what they were doing - the ARM and the balloon payment they didn't fully understand, nor how exactly Madoff was investing their money.

People came to Madoff because of referrals, they trusted him because their friends trusted him. Bad business, but sort of understandable. Many people trust their investment agents without fully understanding the market. Those that bought a house didn't ask the right questions, and didn't understand their mortgage. That's something that's a little easier to understand, and something I think the mortgage brokers didn't explain, knowing full well that they were giving these people a sucker's bet. Those that DID understand how the ARM works took a risk that the rates would actually go down instead of up and that balloon payment wouldn't ever need to be paid. (ARM's are SO for suckers. You wait until the rates are low to buy, knuckeheads.)

Both were (in some cases) deliberately deceived. Neither are crooks, both are victims.

[Dommo]

Never the less as a person who's planning on buying property as well as investing money, I'm going to make sure I understand exactly what I'm getting myself into.

The responsibility in the end is on the person who signs on the dotted line. If I don't understand how an investment is going to make money, I'm not going to risk my money. What happened in my book is that a lot of people just took the words of others without doing their own due diligence. When my life savings are at stake, you better believe that I know exactly what is going on with my money, just as I'm going to know the terms of my mortgage, or terms of my lease. It only takes a few hours to carefully pour over the different facets of a contract(and it's not like you're held at gunpoint to sign), but I know of far too many people who don't take that kind of stuff seriously. Hopefully after this nonsense, people will enact a bit more caution and actually read and understand the financial agreements they've signed onto.

Even now people who are in legitimate mutual funds have lost like half of the value of their 401ks, however that is a risk they took when they put their money on the open market instead of in something safer like bonds. They took a risk, and are feeling the burn. It's the drawback of going for higher returns. As far as I'm concerned I'm not all that worried, since I don't really have any money in the market yet, and at my age I can afford the big swings the market will take. However, for anyone who's over 40, and especially over 50, I don't understand why they'd keep their money in a place where it's at risk.

[Bird of Prey]

I find it sad that many have called these people who have lost their homes "Golddiggers" or in some cases crooks, for wanting a better life, but the Madoff investors or victims, though they pretty much wanted the same thing.


Don, the reason why is because a lot of the folks that took mortgages - I don't the percentage but here in Florida, it's substantial - were speculators flipping properties. I had lunch with one a couple of years ago that was already in trouble, snickering about the fact that he had the bank between a rock and a hard place regarding his own house and the properties he could no longer afford. He said something like "They're in way to deep with me. They can't take everything. I'm gonna sink everything I got into my ocean place and pay that off, so they can't take that. Then it's worth a credit dive. It's a great place. Not bad for a few years work."

Well I doubt the banks could take everything, and for the guy referenced there were thousands of others, living high off the hog, full of their own importance and well rewarded for not having the slightest concern about the money they borrowed. This guy was around a million - maybe more - in debt.

Now I do have sympathy for homeowners who didn't understand, and thought they could eventually refinance or lost their jobs, but these are family people and for them, I'm fine with the taxpayer help. But they're not all that common methinks, or so it seems here in Florida. And sifting through the borrowers trying to determine motive is going to be near impossible.

The Madoff business is different only in the fact that the SEC IS supposed to sniff out rats like him, so his investors have a legit complaint. And for those charities that he bilked, I'm saddened. But his investors also included a fair share of schemers that didn't even want to mention his exalted name, as if they were members of an exclusive club that the commoners shouldn't be privy to, and a referral to Bernie Madoff was akin to a big political favor.

Anyway, it's pretty hard to reconcile it all and find any justice anywhere.

[Don Allen]

I understand Bop, and agree that there's certainly a percentage albeit I think small that fit in the category you mention. But, there is a large segment of borrowers who put down a good hunk of money (10% or more) and were promised by their brokers that they would have nothing to worry about when it came time to refinance, at a lower rate. They were lied to just as the Madoff people were lied to.

My point thru-out the thread is that has been that the news media in particular as cast aspersions on the homeowners, (lumping the bad with the well intended) while practically crying over the Madoff investors losses. What I see here, is sympathy for the rich, well to do, whatever, and disgust for the average guy who got suckered into this bullshit loan practice.

Like some of the posters have said, well, fuck the home buyers they should have read their contract, well, many knew what they were getting but were swayed by unscrupulous brokers who promised they wouldn't have an issue when it came time refinance.

I don't see a difference between Madoff promising a bunch of rich people that life will be grand as long as they invest with him, and shoddy brokers who by the way, AVERAGED over 5000.00 in commissions per loan origination, and promised people the could refinance when their loans reset.

Someone said earlier that there is a fundamental trust issue that we have to get back in our society when dealing with banks and financial institutions, I agree...

[Bird of Prey]

I don't see a difference between Madoff promising a bunch of rich people that life will be grand as long as they invest with him, and shoddy brokers who by the way, AVERAGED over 5000.00 in commissions per loan origination, and promised people the could refinance when their loans reset.

Someone said earlier that there is a fundamental trust issue that we have to get back in our society when dealing with banks and financial institutions, I agree...

The only difference I see is that the brokers - in fairness now - were refinancing all the time so it's quite possible that they fully believed refinance was an option down the road. They weren't dealing with tough qualifications at the time. Madoff was an outright thief - agreed - but catered to the greedy. High flyers have generally been perceived as smarter and hard working, which is why they have money. That's been at the root of a capitalistic society's tolerance for them. Well, as we're learning, they're not necessarily either.

The issue of trust or moral hazard is to me the biggest impediment to a recovering economy. I - for example - will not be investing in the stock market again. To me, the possibility of investing in a company run by somebody unscrupulous, who will gladly take a bonus over paying a dividend, or worse, take a bonus while running the company into the ground, is just too great. I have always thought that investing the bulk of a 401K in the market was ill-advised, as the risk associated with the market is well known. Now, however, it's akin to a slot machine.

[Don Allen]

Good point, bop, I Agree...