Scapegoat

Frank Rich is correct that the fundamental flaws of the American financial system, which allowed our casino capitalism to exist ( and the unwinding collapse in 2008 to happen), has not yet been corrected:

WHEN Bernie Madoff was arrested in December 2008, America feasted vicariously on a cautionary tale of greed run amok. But like Rod Blagojevich, the stunt governor of Illinois who had been arrested days earlier, Madoff was something of a sideshow to that dark month’s main events. For a nation reeling from an often incomprehensible economic tsunami and unable to identify the culprits, he was, for the moment, the right made-to-order villain at the right time.

But Madoff was a second-tier player. Some in the upper echelons of New York’s financial world, including in the business press, had never heard of him. His firm’s accountant operated out of a strip mall and didn’t bother with electronic statements. The billions that vaporized in Madoff’s Ponzi scheme amounted to a rounding error next to the eye-popping federal bailouts, including those pouring into too-big-to-fail banks wrecked by their own Ponzi schemes of securitization. The suffering he inflicted on his mostly well-heeled dupes was piddling next to the national devastation of an economy in free fall. In a December when a half-million Americans lost their jobs — a calamitous rate not seen since 1974 — the video of a voiceless, combative Madoff in a baseball cap, skirmishing with photographers outside his Upper East Side apartment house, soon lost its punch.

A month later Barack Obama would be inaugurated and declare “a new era of responsibility.” Now, another two years have passed, and while the economy is no longer in free fall, we’re still waiting for that era to arrive. What’s extraordinary is that Madoff, unlike such tarnished titans of the bubble as Rubin or Fuld or Prince, is very much at center stage, even as he rots in prison. Perhaps that’s because he’s the only headline figure of the crash who did go to prison.

His evil deeds, in their afterlife, are now serving as a recurring wave of financial body scans. Each new Madoff revelation sheds light on an entire culture that allowed far loftier flimflams than his to succeed — though the loftier culprits, unlike him, usually escaped with the proceeds. That financial culture largely remains in place today.