Metro Views: Madoff and the 'miraculous dollar'

Weeks after announcing that it had lost $110 million, Yeshiva University radically adjusted its loss. It was $14.5 million.

January 4, 2009 05:53
4 minute read.
Metro Views: Madoff and the 'miraculous dollar'

marilyn henry 88. (photo credit: )


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Over here in the Diaspora, we like to kvell about Jews, the "good ones," that is. We count them. Last summer, we counted the Jewish athletes competing in the Olympics. After the November elections, we counted the number of Jews in the US Congress and followed that with a scorecard of Jews destined for high-level jobs in the Obama administration. And then there is the annual rite of fall - counting how many Jews win a Nobel Prize each year. Yet even as we are busy counting and celebrating the members of the tribe, we keep one eye over our shoulders, warily watching the scoundrels and swindlers among us, and wondering what and when the fallout will be. And now we have Bernard Madoff's alleged $50 billion Ponzi scheme. Since Madoff's arrest last month, the Anti-Defamation League reports that there is "an outpouring of anti-Semitic comments on mainstream and extremist Web sites." Within the Jewish community, some blame the media. In addition to the angst about the financial losses of individuals and charitable organizations, there has been communal anxiety that Madoff is routinely - overly - identified as "Jewish" in news reports. It's sort of reminiscent of the so-called financial felons of the 1980s: Michael Milken and Ivan Boesky; they were Jewish and everyone knew it. THE DIFFERENCE between then and now is that Milken and Boesky were considered generically greedy, not "Jewishly" so. Not Madoff. Many of his investors - his victims - were Jewish. In turn, Madoff apparently was courted by Jews. He was, for example, an officer of Yeshiva University, the preeminent educational institution of modern Orthodoxy in the US. He put flesh and bones - and a very Jewish face and name - to a stunning scandal. What else should we call him? Just plain Bernie? If the media and commentators refer to him as Jewish only half as often, what difference does it make? Will we be less embarrassed? Does all this treat anti-Semites to a field day with stereotypes about Jews? Of course. On the other hand, while they may be gleeful at Jewish misdeeds, anti-Semites don't need a Jewish financier charged with a mega-fraud to spew their venom. Anti-Semites manage to thrive when Jews are not in the news. And while it is unlikely that Jews can ever behave as a nation of priests and holy men (or even agree on what constitutes such a nation), it is equally unlikely that bigotry will evaporate if Jews did behave that way (whatever "that way" may be). Rather than focusing on the anti-Semites and our psychological scars, it is time for introspection and an accounting among ourselves. As Ben Stein - the eccentric economist-lawyer-writer-actor - wrote in The New York Times, he declined to put his "few shekels" with Madoff, saying he was not convinced of the man's financial acumen. Some Jewish institutions and individuals also were quick to note that they did not invest with Madoff. It seems clear that many of Madoff's investors were duped by intermediaries who may themselves have been duped, but others appear to have been eager to blindly jump on Madoff's bandwagon. It leaves the impression that "don't ask, don't tell" is viewed as an acceptable financial strategy. AND NOW comes the reckoning. If we were embarrassed by Madoff, one wonders at the financial stewardship of some of the most prominent American Jewish organizations. Weeks after announcing that it had lost $110 million, Yeshiva University radically adjusted its loss. It was $14.5 million; that was the amount invested. The other $95.5 million was profit that YU expected to reap. "It now appears that any 'profits' above the $14.5 million were fictitious," YU's chief financial officer, J. Michael Gower, was quoted as saying. What is the extent of that miscalculation? Have institutions such as YU and Hadassah leveraged their futures on fictitious profits? How many commitments to programs and building projects were made in the belief that the money was there? In this season of the miraculous enduring Hanukka oil, one has to wonder if YU and others believe in the miraculous dollar, one that stretches dramatically in the right hands. We could be speaking of other myths: of Madoff as Midas and something about Greeks bearing gifts. If profits were ephemeral, many losses were not. Some smaller charities and foundations that invested with Madoff had to close in the past few weeks, leaving a bitter taste that the financier stole from the broader community. American Jewish charitable institutions are expected to do good deeds and to operate in service to the community. Now many charities have sustained a crisis of confidence in their fiscal management, and those that rely on donations likely also have sustained a crisis of confidence among their donors. Charities with headquarters in New York are monitored by the New York State Attorney-General's Office. All are expected to maintain rigorous fiduciary standards. While federal prosecutors are looking at Madoff, and Congress this week begins to do the same, it might be wise for regulators and donors to examine how charities in general manage their funds.

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