Bernie Madoff Crisis Essay Solution

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The year 2008 was a very scary one for anyone involved in the US stock market. Due to subprime lending, and cheap mortgages, the housing market became grossly overinflated. Naturally, as with a balloon that’s filled too much, it “popped”. The resulting collapse of the housing bubble had severe implications for the rest of the US economy, housing, and related industries such as lumber, construction, and realty all came crashing down, and the people employed in those fields soon found themselves out of work. As with the stock market crash of 1929, fear of the economic instability caused people to pull their money out of any investments they had. This can be a problem for a healthy bank, being unable to supply the money people are requesting if it’s tied up in loans. However, this would prove to be an even bigger problem if the money never existed in the first place, and would take down one of the largest scams in American history. “Bernie Madoff began investing in penny stocks in 1960, and due to his impressive work ethic, received several big breaks. The first of which was his father in-law loaning him $50,000 to invest, and soon after, Carl Shapiro, a man who made his fortune in women’s clothing gave Madoff $100,000 to invest on his behalf” (Collins 2011). With this kick-start, Bernie quickly began making a name for him, especially as he promised clients a guaranteed 20% annual return on investment. This, coupled with his firm’s adoption of the latest technology made them a tour-de-force in the investment world. But what makes his eventual downfall more interesting is that he was not just a crook, Madoff did manage a successful, and legitimate brokerage firm. To some extent, the credibility he earned from these legitimate busines... ... middle of paper ... ...d to investors, and most of Madoff’s assets have been sold off. Perhaps the greatest irony is that Madoff’s wife, Ruth, is now struggling to pay her bills as a result of the government freezing assets, and selling their belongings to repay the people Madoff ruined. In the end, justice has been served, and the Madoff family has paid for the crimes of Bernie. Though, there is a great tragedy in this, Bernie’s son Mark Madoff committed suicide in 2010, leaving behind two children. “Mack says the ordeal led Mark Madoff to commit suicide last December, on the two-year anniversary of his father's arrest. Mark had first attempted suicide in 2009” (Cuomo and Rhee 2011). As of now, Bernie’s tragic downfall stands as a stern warning against financial improprieties, and the main focus of investigators should be returning as much money as possible to those who were victimized.

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