21 February 2011

Bernie Madoff, convicted of multi billion dollar frauds, has been interviewed by a reporter for the first time since being imprisoned on a 150 year sentence.  He commented that certain banks and hedge funds must have known about the shonky nature of his financial enterprises. He said that banks showed “wilful blindness.” A US legal academic is quoted saying wilful blindness can have the same effect as actual knowledg and that “you can’t shut your eyes and avoid having knowledge attributed to you that you would have known had you opened your eyes.”

A number of banks, facing action as a consequence of the Madoff affair, may well claim that as the SEC took no action against Madoff, they had acted reasonably. Public opinion however is against banks generally. The Edelman Trust Barometer published in January indicates that trust in banks, insurance and financial services are substantially lower than other business sectors.

The New Zealand Mood of the Nation report published in December 2010 places investment bankers at the bottom of the index of occupational respect ( 4.1). Bankers generally (5.5) earn less respect than public servants ( 6.2). Nurses and doctors (7.9) top the index with Police (7.8) in third position.