Madoff, no red flags?

"His fraud is note worthy for its duration, it may well have lasted for decades, and the amount of money investors lost which was nearly 50 billion dollars but for all of his deception Mr. Madoff was right about one thing, the public really didn't understand nor it appears did the regulators, " said, Senator Christopher Dodd (D-CT), Chairman of the Senate Banking and Urban Affairs Committee.

Today a Full committee hearing was held regarding the Madoff fraud case. Mr. Madoff was not only a successful businessman but former chairman of the NASDAQ stock exchange. At the hearing committee, members discussed how the Securities and Exchange Commission (SEC) failed to detect fraud and left violation undetected. Intense and uncomfortable questions were directed to Lori Richard's, director of the Office of Compliance, Inspections and Examinations at the SEC and Linda Thompson, director of the SEC's Division of Enforcement. Their key focus was to confront the failed regulatory system which resulted in the terrible and dramatic affects for thousands of investors over a significant period of time. Chairman Dodd revealed that the fraud went undetected until Madoff confessed and noted that his assets have been frozen in the firms along with current ongoing investigations.

The hearing indicated that pension funds, municipalities, charities and individuals along with banks drastically lost money due to Madoff. A witness, John Coffee, professor of law at Columbia University Law School gave his testimony revealing shocking numbers that in 2002 9.6 billion dollars was lost by the fraud schemes. Ranking member of the committee Richard Shelby (R-AL) not only indicated that the SEC missed vital opportunities to detect fraud but also included the Financial Industry Regulatory Authority in the carelessness which was glazed over.

"I want to be clear Mr. Chairman. I'm not suggesting that individuals within our regulatory structure are responsible for the Madoff scandal. The blame here is easily assigned. Madoff and anyone who assisted him in caring out the fraud are responsible. Rather today I'm suggesting that our regulator's experience with the Madoff firm over the years did present opportunities to intervene but they didn't." said, Ranking member Richard Shelby (R-AL)

by Candyce Torres, University of New Mexico-Talk Radio News Service

More money, more money -- Automakers ask Senate for $34 billion

The CEOs from the big three automakers testified before the Senate Banking, Housing and Urban Affairs Committee to discuss their $34 billion bridge loan appeals to prevent their companies from failing.

“Ford is an American company and an American icon....The entire Ford team...is absolutely committed to implementing our new business model and becoming a clean, profitable company that builds the best cars and trucks on the road for our customers,” said Allan Mulally, President and CEO of Ford Motor Company. All three CEOs discusses their plans to implement new business models, cut costs and build better, more fuel-efficient vehicles in the future.

Dr. Mark Zandi, chief economist and cofounder of Moody’s Economy.com discussed how research suggests that if an automaker files bankruptcy, it would cause a loss in consumer confidence and decrease in sales. “I recommend that Congress provides the $34 billion in aid that the three requested...this is necessary given the potential for automakers imminent, disorderly bankruptcy at an extraordinarily fragile time for the economy,” said Zandi. He also estimated that the $34 billion would not be enough money to stabilize the domestic auto industry. The big three “would ultimately need, in my view, somewhere between $75 billion and $125 billion” to avoid bankruptcy, said Zandi.

Senator Dodd: “Foreclosure crisis is the root cause of the larger financial crisis”

The Senate Committee on Banking, Housing and Urban Affairs held a hearing today on "Oversight of the Emergency Economic Stabilization Act: Examining Financial Institution Use of Funding Under the Capital Purchase Program."

Committee Chairman Christopher Dodd (D-Conn.) voiced his concerns over how the money for the $700 billion Emergency Economic Stabilization Act (EESA) was being used.

"The acceptance of public funding carries with it a public obligation," said Dodd. "One cannot benefit from taxpayer support in all its many forms and assume that one has no duty to serve that same taxpayer."

Dodd expected lenders who received some of the $700 billion to preserve homeownership. “The foreclosure crisis is the root cause of the larger financial crisis...Until we solve the foreclosure problem, we will not have any hope of solving larger economic problems.”

The Senator was critical of lenders who had received public funds and used the money to buy other financial firms or give their executives benefits rather than give out loans. “Credit is the lifeblood of the economy...Lenders have a duty to use these funds to make affordable loans to credit-worthy borrowers on reasonable terms,” said Dodd. “If they do not, then in my view they are acting outside the clear intent of the statute and should reform their actions immediately,” he concluded.