Dressed in Black

With markets rallying over Treasury Secretary Tim Geithner's resurrection as the savior of Wall Street and American banking, we mere mortals should be shivering. The Dow rose nearly 500 points, the S & P 500 increased by 7.8% yesterday. Everyone in a suit and tie was praising the formerly reviled Geithner.

But what is good for Wall Street and banks, the sale of toxic assets, is not necessarily good for you and me, even though our 401 k retirement investments might have regained some of their value yesterday. Read Paul Krugman's column in the New York Times. Remember, he won a Nobel Prize for economics.

This assumption that the American financial system is just fine, thank you, with some excesses, yes, is what allowed someone like Bernie Madoff to flourish and dewealth almost 5,000 "investors." Returns were evaluated solely in dollars, ignoring unspoken beliefs that due to his position, Madoff had access to corrupting insider information, which must have driven these "investors" when Bernie was making profits for them and the market was tanking elsewhere.

Now Lucinda Franks, formerly of the New York Times, has written quite a piece for TheDailyBeast.com, claiming that even the "legitimate brokerage" floors of Madoff's world were phony.

Madoff insisted that everything on that floor must be black. An employee with a silver picture frame was told to replace it. A strange obsession for a man who was allegedly very busy finding foolproof ways to invest in volatile and changing markets. The 17th floor was supposedly the place where the phony business was run. However, according to a former employee: the proprietary and market-making arms on the 18th and 19th floors of Madoff Securities, were designed to lure investors in, especially highly placed figures in society, and to fool the SEC into thinking that he had a large and impressive galaxy of businesses.

Employees throughout the Madoff floors were overpaid and underworked, which leads one to believe that his sons and wife, and niece, are all about to be indicted for their role in the ponzi scheme.

What allowed Madoff to reign, what allowed Joe Cassano to bring down AIG with his sale of $600 trillion in credit default swaps, what allowed banks to structure mortgage rates and commissions to profit from exploitation and fraud, well these aren't signs that the American financial markets are essentially healthy. Tim Geithner is no hero to me, and he shouldn't be for you either. Until we have a full investigation, full accountability, then the banking debacle will remain, like American use of torture in the "war on terror," an unexamined chapter of our history that will inevitably repeat itself.