Madoff/SIPC

[Skip8282]

Basically just curious as to what people's thoughts are regarding the taxpayer having to pay for victim's of Madoff.

As I understand it, currently, the SIPC wants to base the victims claims on the amount of money they invested, but the victims want it based on the amount they "thought" they had earned.

IMO, although I think it's tragic what happened, I'm not too keen on the belief that we taxpayers owe these victims anything.

[cynmark24]

Please understand that SIPC is funded exclusively by the securities industry. No taxpayer money will go to pay any of the victims of the Madoff Ponzi scheme.  Also, SIPC is at fault for underfunding itself. For over 12 years it collected a mere $150 from each brokerage company, no matter how large it was, or how many accounts it had, so that they can tell every customer that their accounts were insured up to $500,000.  Imagine, $150 bought each security company, for all its customers that "protection." 

So, what happens when there is a disaster such as this?  SIPC tells the world it has no money to pay.  Just think for a moment what would happen if the FDIC said that about your bank account if your bank went belly up. There would be a run on banks around the country that would stop the economy overnight. 

This is no different with SIPC.  Anyone who invests money is at rish, because SIPC has been proven to be a scam.

[Skip8282]

That's only partially true.  Yes it's funded by the industry.  But, what happens when it runs out of money?  It turns to the taxpayer.

In fact, Stephen Harbeck testified that they may need to "borrow" a billion dollars from the US treasury.  Let's assume that maybe the taxpayer will get that money back.  Will it be with interest?  Could that money have been put to better use during that time?

I get that the SIPC is doing voodoo math to try and screw the investors so that it doesn't have to pay the full $500,000.  But, when it runs out of money, it's the taxpayers money they will be turning to.