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15 Dec, 2008 16:37

Madoff: bad and dangerous to know?

The world's biggest banks have revealed their exposure to what may prove to be the world's largest ever bank fraud. It’s estimated that the figure could reach US$50 billion.

The man alleged to be behind the scheme is Bernard Madoff, a former chairman of the Nasdaq Stock Exchange, who has run his own investment firm since the 1960s.

Many economists wonder if this giant finance pyramid that has now collapsed in the midst of a global financial crisis, would have gone on undetected if the economic climate had been better.

The list of those affected goes on and on: from global financial institutions to individuals, from senators to film producers, from sports-team owners to banks and even charities.

Among the worst suffers are global financial institutions, such as HSBC Bank which lost over a billion dollars, as well as French, Spanish and Japanese banks, thus making this financial collapse a truly global event. A great number of ordinary Americans have also lost their lifesavings.

Private individuals invested billions of dollars with Bernard Madoff. He used to report from 10% to 15% profit on these investments, but he never ever got any profit as he was constantly losing the money, while getting more and more investment and covering the losses with the fresh inflow of money, paying off the old investors with the new people’s money.

Bernard Madoff had families who invested with his company for generations and really trusted him. Now he stands accused of deceiving them all along.