Bernard Madoff -- the unlikely macher

What was Bernard Madoff really thinking, and when?

In all the extensive coverage of the multi-billion-dollar fraud connected with this so-called pillar of Wall Street, I don't find any substantial clues helping to explain why or when Madoff started his self-described Ponzi scheme. Did it begin after he tried, perhaps unsuccessfully, to be a Wall Street Master of the Universe?

To me, that seems the likely explanation. It's hard to believe Madoff consciously made fraud the starting point of his investment ventures back in the 1960s. He would have had to know that such a pyramid scheme would, sooner or later, collapse -- at which point his inflated status would become a shrinking, flubbering balloon.

I am not persuaded that Madoff was quite the macher -- Jewish "big shot" -- he's described as in the media. Yes, he gave to Jewish charities and he had rich people literally begging to permit them to invest in his funds. But can you see this pudding-faced guy holding down a mike at, say, a New York charity event, and triggering a wave of inside laughter as he laser-beams the real big shots commanding the center tables?

Here's how Madoff described his investment company, as reported by Los Angeles Times columnist Tim Rutten:

"In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing and high ethical standards that has always been the firm's hallmark."

No real macher would powder his image with such platitudes.

Madoff was "smart," he worked hard and -- here I'm venturing into perhaps pop psychologizing -- he wanted to make his mark in a world where there were many Masters of the Universe who were not only "smart" and worked hard, but had that je ne se quois that I don't think Madoff had but sought.

So, to continue my theorizing, what could Madoff do to compete against -- even outdo -- the Masters who got all the attention? He could deliver investment returns that over time would beat the ups and downs of the mercurial Masters. That, I believe, was the road to perdition for Madoff. Perhaps early on he had to do a little trimming if not cheating on returns in the hope that his market guesses would, over the longer term, pay returns bigger than the Masters. But if Madoff proved to be no more a Master of the Universe than he was a macher, what could he do? The better question might be what would he have been forced to do?

The answer, I believe, was replacing small-scale trimming and chating with the massive Ponzi pyramid that ultimately would collapse. If Madoff, cornered by his bad choices, resorted to such a dead-end scheme, then he was perhaps still rational but not sensible.

Rational people can spin logic up to the point of walking off a cliff. Look at all the business executives who have found a cliff to walk off in the current financial crisis. Sensible people don't do that.