WSJ knows this. They write that Bernie Madoff's niece, Shana Madoff, was an active member of a number of associations."The benefit would be to have close encounters with the regulators to express your opinion," WSJ quotes an unnamed colleague of Shana's as sayng.
So how high up the financial regulation ladder were the Madoffs' "close encounters"? All the way up.
Shana and her father were both a part of Sifma (Securities Industry and Financial Markets Association), the industry's main lobbying group. Shana was on the compliance advisory committee. Her father was a member of the board.
According to WSJ:
Sifma is one of the financial industry's most powerful advocates in Washington. It's members have received exclusive briefings on the nation's financial crisis from Treasury Secretary Henry Paulosn and the architects of the Treasury's $700 billion financial markets rescue plan. The Madoff family and firm has contributed more than $50,000 to Sifma's political action committee, and tens of thousands more to sponsor industry meetings , Ms. Madoff helped organize.Who knew Paulson was making these "extensive briefings" to anyone outside of Congress? Do you realize how much money could have been made by those who got a drift of the next direction of one of Paulson's ever changing policies?
Bottom line. In many ways Wall Street is a semi-rigged game, and it is rigged as a result of regulatory and other government agencies. In some cases, the government operators know the rigging they are conducting, most likely such is the case, for example, with Paulson, in other cases, government regulators are used as innocent dupes, e.g. most of the SEC. But, either way, the agencies are more a hindrance than a help in creating free flowing unrigged markets.