In the days immediately after Bernie Madoff’s arrest, some enforcement experts I talked to speculated that the errant financier might have been an honest investment manager for much of his career. They said it was likely that he started scamming his investors only after he found himself underwater at some point and got desperate. After all, they reasoned, no one had ever gotten away with a Ponzi scheme for so long, more than 20 years. (The eponymous Charles Ponzi himself was discovered after only two years.) As we know, Madoff did. And the report from the Securities and Exchange Commission’s inspector general, released earlier this week, finally explains why: sheer regulatory incompetence over two decades, through several SEC chairmen, both Democratic and Republican. The scariest thing about the report, perhaps, is that it isn’t about what happened in the past as much as it’s an indicator of what our future looks like. The Madoff Ponzi scheme was a relatively simple scam: all anyone in enforcement ever had to do over the years was to obtain documents showing that wily old Bernie wasn’t doing any trading at all. They never did. This is the same agency, slightly tweaked, that we’re […]