Chase Madoff/Madoff Chase

HuffPost: Madoff's Relationship With JPMorgan Chase Should Shock No One
February 6, 2011

"So now we learn that senior executives with decision-making authority inside JPMorgan Chase -- the Wall Street behemoth that is supposedly run by the most mature of adults -- apparently suspected that Bernie Madoff was running an enormous Ponzi scheme even as they kept doing business with his firm. They supposedly kept funneling money his way and let him run cash through Chase accounts even as they were sending emails to one another reporting the creepy sense that the whole enterprise didn't look real. This, according to internal documents that came out in a lawsuit on Thursday.

We are presumably supposed to be shocked and horrified by this disclosure. Here is alleged evidence of a blurring of the lines between the legitimate, button-down world of high finance and the nefarious realm of a sprawling con game -- a scam run by a guy whose very name, Madoff, now goes down as a synonym for ripping people off on a grand scale.

But far from shocking, this is really just an appropriate plotline in a story that is finally becoming clear beyond argument: Those lines between criminal fraud and legitimate banking have been blurry for a long time.

The longer the reckoning goes on, the more we learn about the complex derivative deals stitched together by geniuses inside enormous financial institutions, turning simple home loans into trillions of dollars worth of synthetic financial products backed by almost nothing, the clearer this reality becomes. The financial crisis was no natural disaster, as some apologists still claim. It was not the result of risk-management models getting swamped by complexity, or a dreamy belief that home prices could go up forever (though both of those factors certainly played a role). It was, in simplest terms, a hostile takeover of the vital organs of finance by people willing to destroy things of intrinsic value -- people's homes, real businesses, retirement savings -- so they could extract a cut."

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