If Madoff's Accountant High Tailed It to Switzerland, He Made a Big Mistake

John Carney is reporting that Bernie Madoff's accountant, David Friehling, is nowhere to be found.

He hasn't been in his office and doesn't appear to be at his home.

Rockland County District Attorney Thomas Zugibe, who is investigating the firm, said this week he did not know where Friehling was and had not had any contact with him. Zugibe's investigators were at the Friehling office Monday morning, knocking fruitlessly at the locked door, AP reports.

Carney speculates:

We're guessing Friehling has fled to Switzerland, the country that notoriously refused to extradict Marc Rich because his crimes were purely economic.

If Friehling is in Switzerland, it's a big mistake.

Marc Rich wasn't protected by the Swiss because of an "economic crime". Rich committed tax evasion. Tax evasion is not a crime in Switzerland, so they won't turn over tax evaders. Financial fraud is a big time crime in Switzerland. If Friehling is in Switzerland and it can be proved he was in on the scam, the Swiss will arrest Friehling and ship him back to the U.S. faster than the ferry traveling from Lausanne, Switzerland can cross Lake Geneva and reach the shore of Evian, France.

If you absolutely, positively do not want to be turned over to U.S. authorities, you have to go to Iran or, God help you, North Korea.

The Difference Between Business Failure and Government Failure

John Carney nails it:

It used to be said that the reason market solutions were superior to government solutions was that the market had a Darwinian test. When market solutions proved ineffective, the proponents went out of business. When government solutions prove ineffective, the government never goes out of business. It doubles down... perhaps more regulations are exactly what we don't need right now. There have been reports, for instance, that the various SEC inspections of Madoff's business-at which the firm got a clean bill of health, somehow-were actually used to market investing with him by the various feeder funds that pumped billions into the Ponzi scheme. What if more regulation is actually counterproductive.?...Wall Street hates those arugments because it wants investors to be confident enough to entrust their money to its financial advisors. So you can expect brokerages, hedge funds and banks to call for more regulation-but never enough to be effective, since that would shut down business. Many in the securities business want investors who feel safer than they are. Maybe this time we should end this confidence game.

On CEO's Whining About Short Sellers:

"You have to wonder if this helps or hurts investor confidence. When executives keep blaming shorts, it just shows they aren't taking the challenges to their company seriously. And it certainly implies they aren't planning any management shake-up."
-John Carney

From personal experience,I would say 95% of the CEO's, who have complained to me about short sellers, just didn't understand markets, trading patterns and how market makers operate. I think two companies that do have legitimate complaints are Bear Stearns and Lehman Brothers.

It Just Got Worse: Checking Out TARP's New Chief Investment Officer

I'll let John Carney report the sorry news on this character:

The head of the Export-Import bank just got named as the chief investment officer for the Trash Asset Relief Program. Be afraid. Be very afraid. And not just because we've got another of Bald midwestern ex-Wall Streeter running our banking system.

James H. Lambright will serve as the interim Chief Investment Officer for the Tarp. He comes to us after three years of running the Ex-Im Bank, one of the greatest corporate welfare boondoggles running. His great accomplishment at Ex-Im was removing its Congressional oversight and running it as an off-balance sheet special purpose vehicle.

The government describes the Ex-Im bank’s huge liabilities and off-balance sheet chicanery as Lambright’s qualification for the job of being top investment officer for the Tarp.

John's brother Timothy Carney was sniffing out the Ex-Im scam a year ago:

Ex-Im is a posterboy for corporate welfare. Its mission is to transfer money from U.S. taxpayers, through foreign buyers, and ultimately into the pockets of American companies. While the agency touts its support for small business, a vast majority of its money goes to subsidize sales by the largest corporations in America.

The money from Ex-Im loans and loan guarantees — the agency’s biggest transactions, and the only kinds that are itemized in Ex-Im’s annual report — goes overwhelmingly to a handful of large corporations,including Halliburton, Bechtel, General Electric, Caterpillar and Westinghouse.But there’s a reason Ex-Im is known as “Boeing’s Bank.”

In fiscal years 1998 through 2005, Ex-Im has issued $63.5 billion in loans and long-term guarantees. In those years, $33 billion of Ex-Im subsidies went to Boeing. That means that a majority — 52 percent — of Ex-Im’s money went to help just one company.