Thoughts on the Madoff Debacle

You may also like...

35 Responses

  1. Menachem Lipkin says:

    Rabbi Adlerstein,

    The second part of the article was terrific. I think you nailed the psychology of the investors and how easy it is for us to suspend disbelief when things look too good.

    However, I think the first part of the article was mis-focused. I believe it’s less relevant that Bernie Madoff wasn’t orthodox than that people, and I include many if not most orthodox Jews, thought he was or could have been. Unfortunately, with the parade of orthodox “scoundrels” who seem to be in the news with frightening regularity, I’m sure many of us felt a collective sigh of relief to find out that he wasn’t “one of us”.

    There was a time, not too long ago, that we didn’t hold our breath every time we heard a Jewish name attached to something nefarious being reported. I still can remember when orthodox Jews had a reservoir of good will among the general population. A time when the sight of a religious-looking person carried a presumption of holiness, honesty, and decency. Notwithstanding the fact that statistically this may still be the case, as the saying goes “one bad apple can spoil the whole the bunch”. And we, of late, have many, way too many, bad apples to be explained away as aberrations.

    So, I don’t really think we should focus so much on the fact that Rabbi Dorff used Madoff’s alleged orthodoxy to impugn our way of life. I think we should be much more concerned that he could easily have been right.

  2. dovid says:

    Reading Rabbi Adlerstein’s article, brings to mind B Obama with one big difference. At least Madoff built up his reputation as a savvy investor before people entrusted with their savings. There is next to nothing going for B Obama but a few speeches. People voted for him only because he is “cool”. John McCain ain’t no “cool”. Neither is GW Bush. Draw your conclusion: Beware of the smooth, “cool” guy.

  3. Moshe says:

    >>>It all goes to show, he argued, that ritual observance is not enough, and Jews must learn to incorporate ethics and morals in their behavior, rather than stay mired in empty formalism and legalism.

    To the best of my understanding, R’ Yisroel Salanter had a similar issue – thus the Mussar movement was born. Just because a claim is made by a Conservative or Reform Rabbi does not make it baseless.

    Moshe

  4. The Contarian says:

    Conservative Rabbi Dorff did his own Tzitzia check and came to the conclusion that Mr. Madoff has lived and breathed Orthdox Judasim for decades. Hi did so after after reading the MSM desciption of Mr. Madoff’s assocaition with YU.

    Reading the MSM, I came to the opposite conclusion. Had Mr. Madoff been Orthodox, that fact would have been trumpeted all over the media. Remember Jack Abaramoff. Secondly his lifestyle and MO did not jive with being an Orthodox Jew. For one thing, Jews play golf on Saturday morning

    I would classify Mr Madoff as an Ethnic Jew who would be more comfortable in a Conservative synagogue, if he attended synagogue

  5. Gershon Josephs says:

    ‘We like to think that we are rational, objective, and fully in charge. R. Yisrael taught that so much of our behavior is motivated by factors that we are not aware of. Without studying them, we are blissfully unaware of how our inner needs compel what we think are our rational thoughts and conclusions. We are rarely objective, unless we can fully grasp the dynamic that grips us from within.’

    Very true. And this applies in spades to all devout religous believers, such as yourself and all the other writers on this blog.

  6. Micha says:

    R’ Adlerstein,

    You wrote: “… Elliot Dorff … wondered how a person who davened three times a day could get it so wrong. It all goes to show, he argued, that ritual observance is not enough, and Jews must learn to incorporate ethics and morals in their behavior, rather than stay mired in empty formalism and legalism. (This is an old mantra that the Conservative movement dusts off every now and then to criticize errant Orthodox behavior. The thought, of course, is essentially correct, and very much a part of Orthodox consciousness and teaching….)

    And yet it’s also as true as it was in R’ Yisrael Salanter’s day that we are not doing enough to actually get those wonderful ideas from paper to hearts, practice and general culture. We all hear the nice stories about how R’ Aharon Kotler or R’ Yaakov Kamenecki treated every human being. Then we go on being who we were.

    In short, I think the pat on the back is ignoring a major malaise of our community. That’s not to say that Dorff was pointing it out constructively — clearly his solution of ignoring the more rite-like mitzvos and those amenable to be cast as specific acts of obligation, prohibition, and units of measure will only further lower standards.

    As for Madoff, I think that if he could fool the SEC and major hedge funds, there is no proof that more diligence and more objectivity would have caught the guy. As for his claims, while Madoff never filed a bad year, he also never filed a stellar one. The hedge funds I’ve worked at have been able to honestly provide higher returns than his 10% claims. There was little “too good to be true” aspect to what he was saying. Sure, now everyone points to the one negative story in Barrons in 2001. But all through the rest of his history? All the rest of the reviews were stellar.

    I think there is a real connection between the timing of Madoff’s fall and the current general Wall Street problem. As Rav Elchanan Wasserman wrote about the Great Depression, a market collapse isn’t due to a loss of wealth, but rather a loss of trust. The wealth was never there. And so, as trust erodes in the market as a whole, there was bound to be a slip-up in the con-man’s ability to maintain the game.

    -micha

  7. S. says:

    Honestly, I don’t know that Dorff thinks he’s an Orthodox Jew. He used the term “religious,” and outside of many Orthodox Jews, non-Orthodox Jews most certainly do not use the term “religious” as a synonym for “Orthodox.” Buddhist homosexual Sufi vegan Jews who attend synagogues that meet their liking also consider themselves religious, and properly so. Also, there are non-Orthodox Jews who daven three times a day (although I doubt Madoff was one).

    However, Madoff certainly did affiliate himself with religious and Orthodox Jews and institutions, and I think Dorff’s question (“how?”) is very valid, if totally naive.

  8. AK says:

    Comment by Gershon Josephs — December 18, 2008 @ 2:11 pm
    “And this applies in spades to all devout religious believers, such as yourself and all the other writers on this blog.”

    and to non-devout non-religious non-believers such as everyone else.
    Correct?

  9. AK says:

    Comment by S. — December 18, 2008 @ 2:55 pm
    “Honestly, I don’t know that Dorff thinks he’s an Orthodox Jew. He used the term “religious,” [and] non-Orthodox Jews most certainly do not use the term “religious” as a synonym for “Orthodox.” ”

    Sorry S., Dorff does use orthodox and religious interchangeably.

    Here is the direct quote from the article.

    “What he found most troubling, though, was that for decades Madoff had lived and breathed Orthodox Judaism, and yet he apparently didn’t have a problem ripping other Jews off. “As a religious Jew, how do you see it being OK to daven three times and day and then defraud the Jewish communities of many cities of their funds?“ Dorff asked.”

  10. Michoel says:

    S.,
    He was clearly assuming that Madoff was Orthodox. Dorff knows as well as anyone that only the Orthodox pray three times a day, two or three JTS professors notwithstanding. He was probably using the term “religious” to be discrete (or perhaps to feign discretion). To criticize the Orthodox without saying that he was doing so.

  11. K. says:

    No, S. You’ve got the terminology wrong. As someone raised in the conservative movement (and who only left around 7 years ago), I can tell you that “religious” means orthodox when the conservative movement uses that term.

  12. dovid says:

    “And this applies in spades to all devout religous believers, such as yourself and all the other writers on this blog.”

    Not so fast. We (“all devout religous believers, such as yourself and all the other writers on this blog.”), as opposed to the rest, make an honest effort to be objective because we truly try to come to grips with “the dynamic that grips us from within.”

  13. Chaim Fisher says:

    The fact that Yeshiva University placed Madoff on their board and made him chair of their business school is indeed a problem for the Orthodox world.

    We’re supposed to be smart. We were dumb. We’re supposed to be questioning. We were fooled. We’re supposed to be modest. We were greedy.

    It’s time for some soul-searching, not for defending ourselves because Madoff was ‘technically’ not Orthodox, whatever that means, even though he spent his time in Orthodox institutions.

  14. YM says:

    Micha, besides Barron’s in 2001, there were other analysts who advised their clients to steer clear of Madoff. A link from the NY Times contains one example. It is amazing how so many people were and are willing to invest in a firm whose returns were statistically impossible to replicate.

    All Jewish ‘movements’, Orthodoxy included, have a bad habit of being publically critical of the other movements, while making excuses for the shortcomings in our own movement. There is a middoh tovah of being critical of oneself and generous in how we see others. Alas, it is very difficult to hold by that. We could all do well to concentrate on how to improve the sincerity and honesty of our service to Hashem, individually and in our own movements.

  15. YM says:

    I think there is another point worth making. As Jews, we believe that only Hashem is infallible; all human beings, no matter how great they seem, can make mistakes or be different than what they appear to be.

    As a BT, when I first came into the frum world, I was blown away by the high quality of the people I came into contact with. Many years later, one of my neighbors, also a BT told me about how he was ripped off by someone in the community.

    The point is this – all of us have to ‘keep our heads’ and do whatever due dillegence is necessary in any particular situation. Just because someone appears to be ‘pious’ or ‘religious’ does not guarentee that he or she is not a scoundrel.

  16. dovid says:

    I found this quote in Jerusalem Post: “Typically, in the context of the entire financial crisis, it is the gentiles who have identified this central issue, quicker and more clearly than the Jews, including – perhaps especially – the Orthodox rules-observant but mostly morally blind “religious” Jews.”

    I think a real sharp response is warranted. I wish I could do it, but I am not up to this. English is not my 1st, 2nd, or 3rd language.

  17. Bob Miller says:

    We’re talking here about a human problem, not a specifically Jewish or Orthodox one. However, it should bother us when any segment of Orthodox society fails to think critically about an important matter—a good Jewish education should reinforce critical thinking skills.

  18. Reb Yid says:

    At the very least, one must characterize Madoff as one who was very supportive of Orthodox institutions.

    And at any rate, Ezra Merkin most certainly IS Orthodox. While it may very well be the case that Merkin did not know of Madoff’s scheme, it appears that in many cases (such as YU) Merkin charged a considerable fee for his services…which seems, from all accounts, to have been nothing more than depositing his client’s funds straight into Madoff’s fund.

    If true, it’s an utter shanda.

  19. Mr. Cohen says:

    Why do Jews who claim to be Orthodox continue to purchase and/or read Orthodox-bashing newspapers like: The UJA Federation Jewish Week and The New York Times (which is also against Israel and Jews in general)?

  20. mycroft says:

    “At the very least, one must characterize Madoff as one who was very supportive of Orthodox institutions.

    And at any rate, Ezra Merkin most certainly IS Orthodox”

    The tragedy is that institutions will honor people who are known to at a minimum stretch the law. This is not limited to Chareid, or MO institutions. Certainly, non Orthodox institutions have been guilty of the same thing.

    There is a lot that has been written about Merkin-he has certainly identified as Orthodox, on his mothers side descended from famous Rabbonim-a Harvard Law Grad so certainly should be aware of legal requirements. I suggest not making such a big thing about Madoff not being Orthodox until we see all the details of the case.

  21. Ralph Kostant says:

    Since the scandal broke, I have heard a number of Jews declare that they are grateful the most prominent victims were Jews or Jewish philanthropies. Rabbi Adlerstein says as much in the opening paragraph of this post. It reminds one of the bad old joke about a group of Jews who are gathered in a shtetl shul, agonizing over a rumor that the body of a dead Christian child has been found in the forest. It is only a matter of time, they worry, before the Jews of the town are acused of ritual murder and a pogrom is launched. Just then a Jew runs into the shul shouting, “Wonderful news, Jews, the dead child is Jewish.”

    Here we are in the United States of America in 2008, Rachmanu Etzlan and we are telling ourselves in effect, “Wonderful news, Jews, the dead child is Jewish.” Apparently even in this nation of chesed (to which we must be immeasurably grateful) we are not so far removed from those frightened shtetl Jews. Only in this case we must pray to HaShem to deliver us from ourselves.

  22. Jewish Observer says:

    “I suggest not making such a big thing about Madoff not being Orthodox”

    – for all we know he might very likely been on his way to doing teshuva, a not at all uncommon phenomenon these days. after all, aren’t we required to be dan lechaf zechut?

  23. LOberstein says:

    Why do Jews who claim to be Orthodox continue to purchase and/or read Orthodox-bashing newspapers like: The UJA Federation Jewish Week and The New York Times (which is also against Israel and Jews in general)?

    Comment by Mr. Cohen — December 20, 2008 @ 10:25 pm

    A good question deserves an answer. Because we want to know what is going on.In the internet age,anyone who wants can find a plethora of news sites. Newspapers at least have to follow laws, the internet is full of nut cases who make up stuff.
    I get the NY JewishWeek even though I live “out of town” because it has a lot of news not found in other publications.
    The newspaper Hamodia is a kiddush Hashem. It gets bigger every week and is full of worthwhile information. However, it must censor itself heavily to keep within the confines of Gerer Chassidus. It also has to leave out most of the really interesting news because telling the story would either be loshon horah or get them banned. There is tremendous pressure for thought control in the frum community , but I think most intelligent people actually do think. It is hard though when the “know nothings” get riled up and cause trouble.
    A godol told his son who told me “don’t get into an argument with an under employed person, because they have more time than you.”

  24. Roman says:

    “As for Madoff, I think that if he could fool the SEC and major hedge funds, there is no proof that more diligence and more objectivity would have caught the guy. As for his claims, while Madoff never filed a bad year, he also never filed a stellar one. The hedge funds I’ve worked at have been able to honestly provide higher returns than his 10% claims. There was little “too good to be true” aspect to what he was saying. Sure, now everyone points to the one negative story in Barrons in 2001. But all through the rest of his history? All the rest of the reviews were stellar.”

    -very well said Micha.

    “And at any rate, Ezra Merkin most certainly IS Orthodox. While it may very well be the case that Merkin did not know of Madoff’s scheme, it appears that in many cases (such as YU) Merkin charged a considerable fee for his services…which seems, from all accounts, to have been nothing more than depositing his client’s funds straight into Madoff’s fund.

    If true, it’s an utter shanda.”

    -All Merkin can be accused of is bad investing. Maybe some degree of inhonesty. While he certainly should be held responsible for this irresponsibility, he is as much a victim as all of us. Furthermore, his commitment to the Jewish community and philanthropy should not be forgotten. He was not a Madoff, just rash. He acted fiscally irresponsibly, not imorally, and he has paid for his shortsightedness. Not that anyone has, but it is inappropriate to put him anywhere in the same league as a Madoff.

  25. Sam,y Finkelman says:

    Well, I think it is pretty obvious what was going through Rabbi Dorff’s mind: Bernard Madoff had a position at Treasurer of Yeshiva University. Would Yeshiva University give somebody an official position who wasn’t Orthodox? He guessed no.

    There was no way for him to quickly make sure, so if he felt it necessary to be sure before he said anything, he’s not be able to to use his beautiful argument. In the words of the Talmud, he’d lose a beautiful pearl. (Well, to him it was a pearl) And he didn’t want to do that.

    About Ezra Merkin. He apparently did do something wrong because it is more than an unspoken understanding that all investments are not supposed to go to the same place. That may have violated some legal obligation. But that needs checking.

    By the way, we musn’t assume that Bernard Madoff had no qualms at all about what he was doing. Maybe that’s part of the reason he didn’t take money from everybody. (Another reason could be he wanted the Ponzi Scheme to grow slowly so it could last longer and there could be other reasons. But we shouldn’t assume he had no qualms at all.

    What can we see from how it ended? At the end he wanted to give away what money he had left to his employees (caring about them more than his investors) close up shop, and face the music. When he told his sons they went to a lawyer who apparently told them they can’t do this and if they let this go on one more day they’d be guilty too.

  26. Charles says:

    Rabbi Adlerstein:
    As you know, most reputable historians believe that the legacy of Christian anti-Judaism made the Shoah possible. In discussing this with devout but uneducated Christians, I am often told that the people who persecuted Jews over the centuries weren’t Christians. Why? Because Christianity is a religion of love and people who do horrible things are therefore not “really” Christians. As the Church Lady used to say, “how convenient.”

    Madoff may not have been punctilious in his observance of either ben-adam la-Makom (“ritual”) or ben-adam l’chavero (“ethical”) commandments but he was sociologically a part of the Modern Orthodox community.

    If you take a look at the charities which lost money to him. all of them are either “just Jewish” or Orthodox (Ramaz, Maimonides School, Kehilath Jeshurun and of course Yeshiva University.) Not a single specifically Conservative or Reform institution.

  27. michoel halberstam says:

    Don’t you think that there is something wromg with our thought process when everything that pertains to a Jew or Jews always propts us to ask if he is frum? As a child I never heard such a question. Unfortunately today this question is asked by “our” people ( frum people) when we want to say that a certtain event did not really happen to “us”, because irt happened to one of “them.” In the case of the non-observant world the same thing is true. It did not happen to “them” because it happened to “us.” I don’t know how to evaluate this behavior, but it certainly proves that we have stopped thinking of ourselves as part of the same Klal. Since those of us who study and try to keep Torah Umitzvos know what such conduct implies, while those who are totally ignorant do not, I suspect we have to take a large part of the blame. Please feel free to disagree, if you wish.

  28. J. Tyler Ballance says:

    As Ben Franklin reportedly said to the signers of the Declaration of Independence, “We must all hang together or we will surely hang separately.”

    To those outside of the Faith, there is no difference among those in the Jewish community. All of this internal squabbling only serves to harm us and those generations who follow. Disowning Bernie Madoff is an act of futility, since the vast majority of our fellow citizens will still see his name, and the word Jewish and crook, hereafter linked together.

    The best approach for the Community to take as a whole is to condemn Madoff’s criminal act and for the rest of us to continue building good businesses and serving as honest, hard-working members of our towns, all across America. Let the goodness of the united Jewish Community shine so brightly that the isolated acts of the Madoff’s will be seen as pitiful exceptions.

  29. Bob Miller says:

    At the end of the day, Jews collectively are left with a black eye and a lot less money. Whether the guilty parties had qualms or not.

  30. dovid says:

    To michoel halberstam and Charles:

    I agree with you with a heavy heart. If we hold Obama’s associations against him, can we not hold Madoff’s associations against us?

  31. LOberstein says:

    re comment 27. Your observations are correct.I think that the gulf between the frum and the non frum has grown over time for reasons that are plain to see but sad anyway. Years ago, many people kept a kosher home, today their children eat meat and milk cooked together without even realizing that it isn’t a Jewish thing to do. Years ago, we had a common cultural mileau, Yiddish , synagogue affiliation with a traditional shul, grandparents who were frum. Now, young Jews are not joiners, their are proud to be Jewish but don’t do much to act on it.
    At the same time, the observant community has grown in numbers and is more and more independent. I don’t know for a fact but I guess that Lakewood gets almost all of its money from orthodox doners . The time when we had a lot in common with the non frum community seems to be passing. I am not happy about this. The kiruv world is the exception but for Jews who live in frum communities, how much social interaction do they have with a non frum Jew?

  32. dovid says:

    The latest casualty in the Madoff affair is an investment fund manager who committed suicide after learning that $1.4 billion that he invested with Madoff evaporated in thin air. This affair just started unfolding. What if the current tidal wave of destruction resulting from market illiquidity and credit crisis will undo several other practitioners of fraud and deceit with Jewish names and Orthodox affiliations, or even full fledged members of Orthdox kehilos? Madoff might be unique in the magnitude of his fraud, but we know his was not a singular case. In not so old times, a backlash with collateral damage (you and I) followed. We may call the Nazis cretin and the Arabs racists, but Madoff may provide the spark that could ignite the mob’s thirst for vengeance, especially in the current economic turmoil. It may ask for a pound of flesh or a bucket of blood (yours and mine) to assuage its frustrations and severe losses (jobs, savings, homes, retirement funds, etc.) that they certainly incurred. Are you sure, it is out of the question in 21st century America? Dinkins let New York black youth run amuck unchallenged for three days to vent their frustrations, terrorizing the Jewish population in Crown Heights, and looting and destroying property. Will Obama do differently in similar circumstances?

  33. Charlie Hall says:

    “Would Yeshiva University give somebody an official position who wasn’t Orthodox? He guessed no. ”

    It would not have taken a lot of effort to discover that Yeshiva University does not discriminate on the basis of religion. For one thing, it is illegal!

  34. Charles says:

    Charlie Hall, re: your comment #33:

    While it’s illegal for YU to discriminate in hiring for its secular components — and YU does a good job in adhering to this and often gets slammed from the right for it — isn’t the board a different matter? (Or RIETS? Would RIETS hire a non-Orthodox talmudist, assuming the requisite level of expertise?)

    It would be very hard for someone to document a claim of discrimination for not being appointed to the board of YU and until the Orthodox community’s disowning of Madoff I assumed as a matter of course that the Board of YU was made up exclusively of Orthodox Jews. I would be very surprised if a Reform or Conservative-affiliated Jew was on the Board of YU; in fact, it would be less surprising to find a Gentile.

    Religiously-affiliated universities with secular components and government funding are a strange hybrid and often walk a fine line. My alma mater, Georgetown, also adheres to academic freedom, non-discrimination, and receives extensive federal funding. Yet, in the theology dept. certain slots are reserved for Catholics and in order to teach certain subjects in that dept. one needs ecclesiastical endorsement. Until recently the President of Georgetown had to be a Jesuit and if I remember correctly the by-laws had to be changed when they hired a lay president a few years back.

  35. Ben says:

    Isnt the real issue: How could YU mishandle a $100million that came from hard working people? They gave it to one of their hevra to “invest” and never looked back, all the while being raped by him. AND the bonus: now YU will throw good money after bad by hiring a white shoe lawfirm to tell them what the should already know!

    Im holding back this years contribution to YU till someone takes responsibiltu.

Pin It on Pinterest