Could the Media Have Stopped Madoff?

One of the chapters assigned to read this week in Institutions of American Democracy: The Press was an essay entitled "The Watchdog Role," by W. Lance Bennett and William Serrin. The beginning of the chapter speaks about the role of media as a watchdog-that the media should investigate and document the activities of institutions in order to notify the public of these actions that may affect them. The authors note that although journalists do this most of the time, they "often miss early-warning signs of important activities that later blow up as scandals that prove costly to the public."

One scandal that comes to mind and that is being discussed again is that of the Madoff Ponzi Scheme. Madoff is now claiming that the banks "had to know" what he was up to, but that they ignored it and pretended not to realize.

For the sake of argument, let's assume Madoff is telling the truth. Is this something that the media should have somehow picked up on before it broke out into a huge scandal, affecting thousands of people and many many organizations? According to Madoff, there were "early-warning signs" that banks must have picked up on. Clearly if this is so, it was on the bank officials to look into the situation and investigate. If we take Madoff's statement as true, we now face many questions. Firstly, we now have to look into these banks and the bank executives who dealt with Madoff's accounts, and question why they did not notice anything for so long. Secondly, if they did notice sketchy business, why did they not look into it more? Thirdly, looking back, were there signs that the media could have picked up on? How could a better watch on Madoff and the banks have prevented the loss of millions of dollars?

Although I agree with Bennett and Serrin's assertion that the media should investigate and dig up facts to prevent crimes and fraud from blowing up into scandals, I don't think we can blame the media for missing early signs of scandal. In the Madoff case, if the banks didn't look into the situation themselves, how could we expect the media to? And even if the banks had scrutinized the situation, did but did not tip off the media, how could journalists have known? It takes a tip from an insider, the leakage of confidential information, for the media to have a breaking story. They need to be notified that something is going on in order for them to start digging up evidence.



As a side note, both Time Magazine and the NY Times had an article on this story. Time magazine says Madoff's son Daniel committed suicide, while NY Times says his name was Mark.

Someone needs to get their facts straight.