Editor,
March 13 was a scary day for Bernard Madoff. It was his first full day in jail after being sentenced the day before for masterminding one of the largest frauds in history.
According to the Wall Street Journal, "Q&A on the Madoff Case," Madoff started trading with a legitimate strategy. But when it failed to make the desired returns, he reverted to a Ponzi scheme. In a Ponzi scheme, investors give their money to an investment firm that the firm uses to pay existing investors their supposed gains, which creates the appearance of a successful investment company. This scheme only works with a continual inflow of cash from new investors that covers the withdrawal of cash from existing customers.
During the recent market downturn, existing investors demanded roughly $7 billion in withdrawals from Madoff's firm. Only $200 million to $300 million was in the firm's coffers. According to testimony at his hearing, Madoff indicated the fraud began in the early 1990s. His goal had been to provide institutional investors with strong returns in spite of market downturns. We now know he accomplished this goal with the Ponzi scheme.
German philosopher Friedrich Nietzsche once said, "What someone is begins to be revealed when his talent abates, when he stops showing us what he can do." This certainly applies to Madoff. He simply lacked one of the fundamental, ethical building blocks: character. But before we write him off completely or chalk him up as a lost cause, we should note that Madoff's behavior was closely aligned with what has become one of our societal norms: an emphasis on results rather than how you achieve the results. And given that Madoff started his scheme in the early 1990s, we must see that we, too, are culpable of caring more about the results than how he got them. Otherwise, we would have questioned his too-good-to-be-true results a little earlier.
In his recent book Uncommon: Finding Your Path to Significance, former Indianapolis Colts head coach Tony Dungy says, "Character begins with the little things in life. I must show that I can be trusted with each and every thing, no matter how trivial it may seem." And he asks, "Do you have the appropriate habits to get you through a tough situation, or are you the type to cut corners and hope things turn out all right? Your character will determine the answer."
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Each decision we make regarding relationships, school, business, etc., affects the rest of our lives and the lives of those around us. That's why it's so important that we have the character to make the right decisions in each situation again and again. Unfortunately for many, Madoff did not have the appropriate habits to get him through his tough situation. The question is, Do you and I have the character and the courage needed to keep us from becoming the next Madoff?
Andrew Waldum
UNM student
