Zing!

A peppery interview with “Madoff whistle-blower” Harry Markopolos recently appeared in the decidedly mainstream publishing environs of the New York Times Magazine.

In the Q&A, Markopolos (who conducted a lengthy, and nearly fruitless, effort to persuade the SEC that Bernard Madoff was a fraud), provides a mass audience with some unflattering inside baseball.

As someone who has for years heard diss-y opinions about SEC commissioners and staffers (in strictly off-the-record conversations with regulatory insiders) it is, well, kind of wild to see Markopolos describe the following SEC officials to millions of readers in these words:

• James Donaldson: “Too tough on Wall Street, so he got the ax.”

• Christopher Cox: “He wasn’t going to do his job. That’s why he got the job.”

• Mary Schapiro: “Coldly polite.” And

• David Becker: “Ready to come across the coffee table and strangle me.”

Becker is current SEC Chairman Mary Schapiro’s general counsel.

It appears that Becker, when he and Schapiro met with Markopolos, may have taken less than kindly to Markopolos’s passionate and frequent assertions that the SEC is “overlawyered,” underskilled (in Advanced Wall Street Math), and simply overmatched when it comes to providing oversight of the financial services industry.

Here is a YouTube clip of Markopolos’s testimony to Congress last year.

Markopolos is not the most congenial whistle-blower to achieve prominence in recent years, and perhaps the fact that he’s promoting a book will rub some vehement anti-regulation folks the wrong way. Still, the man tried to alert the SEC to Madoff’s shenanigans for nine (!!!) years. Ignore his abrasive tone, and his assessment of the SEC’s weaknesses – too much legal expertise and perspective, not enough current finance/math/quant savvy – is right on … and ought to be addressed.

One of my off-the-record regulatory insiders has complained for years about the SEC’s shortcomings in a different area, pay scale and power:

“How,” he rhetorically demands, “can an SEC staffer earning $175,000 a year go toe-to-toe with senior Wall Street executives and lawyers who earn 20 times that amount and can marshal massive amounts of resources to wield their influence?”

Before we consider new regulations, shouldn’t we make sure that our regulators are equipped to understand and influence the subjects of these regulations?

Ugh … now I’m starting to sound rhetorical and a bit preachy.

For a more inspiring and constructive perspective on what Madoff means to all of us, try this column. ###