Color of Money Book Club
Catastrophe: The Story of Bernard L. Madoff, The Man Who Swindled the World

Michelle Singletary
Washington Post Columnist
Thursday, May 21, 2009 12:00 PM

Personal finance columnist Michelle Singletary hosted an online discussion with Deborah and Gerald Strober authors of "Catastrophe: The Story of Bernard L. Madoff, The Man Who Swindled the World" on Thursday, May 21 at Noon ET.

In her May 1 column about the book, Michelle writes: "Deborah and Gerald Strober dip into the perspective of the unknown individual investors, many of whom saw their life's savings vanish. It's the billions of dollars lost by these poor souls that anger the Strobers." Read more in How Madoff Became an Equal Opportunity Thief.

Read Michelle's past Color of Money columns or check out her past Book Club picks.


Michelle Singletary: Welcome everyone. Lots of news and lots of questions already. So let's get started.


Laurel, Md.: Michelle, I grew up very poor, but count myself lucky because poverty was the "only" thing we had to deal with: no crime, drugs, or other aggravations. We stayed in school and did not have children before we were married. Families looked after each other. We were truly raised by a community. And every spare penny went in the bank! There weren't too many of them, of course. I wish I still had my original bankbook, with its numerous 50 cent entries (babysitters were paid $.15 an hour back then) and carefully thought-out withdrawals for a prom dress

I'm now widowed and still watching my pennies, though I've allowed myself a few creature comforts like a computer and cable TV. 3 of my 4 kids are the same way, one even more so, which isn't a bad percentage. The 4th is hopeless; bad choices, bad men, way too much credit, no financial sense whatsoever. I raised them the same and don't know how this happened. But I've had a long, full life and am grateful for my many blessings. Keep preaching your "no credit" mantra and good luck to you and yours. It truly is the only way to go.

Michelle Singletary: Thank you so much. What a nice compliment. And as for the wayward child, it happens. Even the best parents can have a triflin kid. Just keep talking to her, advising her (sending her my columns and weekly eletter). Maybe one day she will come around.


Rockville: There's been a lot of news about the large number of Jewish, and the fact that Madoff's fund was well-known among Jewish organizations. Was there a degree of "affinity marketing" exploiting the implied trust of shared culture?

Deborah and Gerald Strober: Definitely. Madoff deliberately sought out Jewish individuals and organizations based on that trust which as we all now know horribly misplaced. In furthering his deception, Madoff gained the trust of communal leaders and institutions.


Laurel: Re: Rich to be Poor

While driving through an unfamiliar area of Prince Georges County a couple of days ago, I spotted one of those check-cashing places with large sign "Tax Refunds Cashed Here." Being someone who puts my checking account routing number on my tax return, I'd never thought about how people without checking accounts would get their refunds.

Is there a convenient, no-cost way for the checking account-less to get their refund? Or are they faced with either hassle or fees?

Michelle Singletary: It's not a good way to cash your check. Fees do exist and charged to a group of folks who can least afford them.


1ST HOME BUYER TAX REBATE: Hi Michelle, I love your advice, but regarding the First time home buyer tax credit I disagree. I purchased my house in 2008. I was only able to afford a home that need some updating and cosmetic work. The $7500 will allow me to do the work that needs to be done like new carpeting and replacing the 70's paneling. I don't have equity for a home equity and I don't want to use my savings. I also am fully aware the money will need to be repaid, and because of my low income it won't hurt me.

Michelle Singletary: So you are disagreeing with me that you should have saved the money first rather than borrow it from the government?

If so, I understand your choice. But I'm not wrong that the first option for what you want to do, which you said including cosmetic changes should be to save the money rather than use debt.


Alexandria, Va.: Oh, Michelle. I have been a devoted student of yours for awhile, but I always wondered about calling credit evil until now. I always thought about it like alcohol. Easy to abuse and can be dangerous, but not inherently bad. I still think credit is a tool. Credit companies however are EVIL. Since credit comes from credit companies, I have to accept that it is eeeeevil.

I came to this understanding, finally, when I was pulling my annual reports. I have a score of around 890 and the two agencies I checked both had tons of language trying to chastise and scare me into taking out more credit because I get a grade of "B" since I "don't have enough credit." Evil. Good thing I know better.

Michelle Singletary: Good thing is right. And came around like so many others usually do :)


Washington, D.C.: Thanks for doing this chat. I'm curious about your perspective on whether the S.E.C. really could have/should have prevented this scandal, or whether people making claims to that effect are casting blame where it does not belong.

Michelle Singletary: The SEC did a POOR job in catching this. In their book the Strobers reprint the memo from the investment guy who I'm serious laid out the WHOLE thing. Now the memo was crazy to read but he nailed it. If someone just just done a elementary check of say the stock, etc. Madoff claimed to be buying the whole thing would have come to light years ago.


Washington, D.C.: Hi Michelle,

I know your chat today is on the book dealing with financial catastrophe, but I thought I'd submit a personal finance question just in case you were also answering them.

I have some savings -- enough to pay off my mortgage for the rest of the year. And that's it. I would say I have about a 20% chance of being laid off from my job. I'm in my early 30's and my total retirement savings is at about $10,000, which is really low. I'm underwater on my mortgage at approximately $50,000. Should I be saving more so that I have a better cushion of savings should I be laid off, or contributing more to my 401k?


Michelle Singletary: In my book that's a pretty high chance of being laid off.

Preserve your cash for now.


Washington, D.C.: It is a real shame that folks need to play the Jewish card with Madoff. Please comment on the vicious anti-semitism that has erupted with this.

Deborah and Gerald Strober: To those people who believe that anti-Semitism in America is a thing of the past, the many bigoted responses to the Madoff affair have been a rude awakening. That said, we trust that the majority of Americans do not hold a whole community responsible for the despicable actions of one individual.


Arlington, Va.: Michelle, Did you read your competing newspaper's Sunday magazine about one of their economic reporters drowning in debt and a subprime mortgage? Just curious what your thoughts were on how it can happen and what he could have done differently then or now.

Michelle Singletary: I did read that excerpt from Edmund L. Andrews' new book, "Busted: Life Inside the Great Mortgage Meltdown."

In fact, I'm going to read the book. A good friend and I have been discussing Andrew's tale of how he ended up in a mortgage he couldn't afford.

I have so much to say and not enough time today but it was certainly shocking that someone so educated could have found himself in the place that he is in.


Silver Spring, Md.: Hi folks,

I know this is off-topic, but it relates to my savings strategy. My husband & I have our paychecks direct deposited into a money market checking account, which serves as our liquid savings. Our long-term savings are direct-deposited elsewhere. This way we pay ourselves first.

My problem is that I'd like to set up autopayments for the mortgage and some other bills. However, for some reason I can't make autopayments from a money market account. There's also a limit on the number of transfers per month, making it difficult to continue the strategy of putting everything into the money market and only transferring what's needed to personal checking. I don't get it - I can pay these bills with a check from the money market account, but I can't set up autopayments? Do you know why this is?


Michelle Singletary: Those accounts have different rules. Just is. If it's too annoying just switch to an account with a good rate (check


Baltimore, Md.: Submitting early-- Re: cell phones. I'm 25 and have no landline, so my cellphone is indeed a necessity. I encourage anyone who has a cell phone to check and see if they get a corporate discount. I get one through my fiance's company (19 percent off per billing cycle!). Even through the little company I work for (less than 50 people), I'm eligible for a 10 percent discount per month. Can't be stacked, unfortunately! Necessity or Luxury? Please Redefine. (Color of Money, May 21)

Michelle Singletary: I see your point. Others have written to me to say the same.

But I hope you and others who only use a cell understand my larger point too. That for a lot of people the cell is a toy. They spend WAY more a month than they should to play around with this device, text people, download whatever.

So if you use your cell in place of a land line I get that. But I also am trying to challenge people to look at their expenses even for the things they "need."

I have a cell. I hate it. I hate having to pay extra for the media package, which I only just got kicking and screaming. Seriously I was in the store upgrading and was pissed! But I travel a lot. I have to do my column on the road so I often need to make changes or communicate with my editors while in airports, etc. BUT .... you can do that (have a phone with bells and whistles, etc. if you have an emergency fund, life happens fund, savings for retirement, college fund if you have kids, no credit card debt, etc.

Then and only then can you have toys and texting and whatever. That was my point.


For 1st time homebuyer: No, no no. Replacing paneling and carpet (unless it's a hazard to your health) is a WANT, not a need. I bought a house two years ago. Yes, there are things I wanted to change, mainly in my yard. I saved up the money and am doing it slowly as I can afford it. Nothing feels better than knowing I have the money on my own to cover any repairs or upgrades that I need.

Michelle Singletary: Exactly!!!

Folks this is about a mind set more than the money. When you get into the habit of waiting and saving for what you want you think twice about is really an want and need getting into debt, etc.


Re: 890 FICO: How high do scores go? I thought the maximum was 850. Thanks.

Michelle Singletary: Different companies have different scales.

The score most widely uses is FICO and that range is 300 to 850.


Alexandria, Va.: Interesting article about necessity v. luxury. When I was younger, I always thought clothes washer/dryer was a necessity. Then I lived abroad for a few years. Now I see the washer as a necessity (see, for example, the Post's article on how much more expensive it is to go to the laundromat), but not the dryer. When I first lived overseas, I either had neither a washer or dryer - so I went to the expensive laundromat down the street and washed my clothes, then dried on the line. The next house had a washer, but no drier, and it worked well.

However, I think the question in the poll about the cell phone can be misleading. To me, having a phone is a necessity. I would have answered that the cell was a necessity because that's all I have - and i have the cheapest plan - no text, no data.

So, I think they need to rethink the question:

Is a phone a necessity? Is having both a home line and cell a necessity? Is having data on your phone a necessity?

Michelle Singletary: See my previous answer on this issue.


Rockville: I saw you on Meet the Press - nice job. I am aware of your long-standing jihad against debt, and in some cases and for certain folks, your advice is sound. However, your general position is contrary to basic financial principles of leverage and the present value of money - principles taught in any intro finance or MBA class. Will you modify your dogmatic stance towards debt to account for people that can manage their finances responsibly, or continue to adhere to the Big Mama theory, which is certainly not part of the curriculum at HBS, Chicago or Wharton.

Michelle Singletary: Oh yes, by all means we should listen to the knuckleheads who bought us smack in the middle of this horrible recession.

Yes, let's continue to follow the morals of the moneychangers who think nothing of taking advantage of the least among us.

Not changing.

Debt is bad.

If you adopt that mantra you will limit your devotion to debt.


Arlington, Va.: Can you talk about the effect that Madoff had on many charities whose own accounts were drained as well as the accounts of their primary benefactors? This is a terrible situation for so many nonprofits. What can of justice can be had?

Deborah and Gerald Strober: The impact has been nothing less than devastating. As for justice, at least for the moment, there is none. As for evidence of Madoff's criminality, consider his ruthless exploitation of so many worthy not-for-profit organizations.


Rockville: Do you think it's possible that Madoff's wife, sons and employees had no knowledge of what he was doing and he alone is responsible for this massive fraud? Also, do you think that there is any substance to the recent reports that three prominent clients are under investigation because they knew what Madoff was doing and may have collaborated with him in fabricating investment returns?

Deborah and Gerald Strober: There is no question in our minds as to their knowledge and/or involvement in Bernard Madoff's crimes. We are waiting for Ruth Madoff's shoe to drop. We are disturbed that after more than five months, the governmeny has not brought criminl charges against Ruth Madoff.

Michelle Singletary: For me, I just can see how he did this all on his own. The paperwork alone would require a team. Let's hope that the others involved get what they deserve.


Takoma Park, Md.: Michelle, please keep up the fight against unnecessary cell phones! I have a "pay as you go" model for true emergencies that costs under $10 a month. Some of my friends pay several hundred dollars a month -- and for what? That's fine if you're a zillionaire, but I'm not. I actually resisted even an emergency phone until I found myself in an emergency that ended well but scared me silly. However, there's no way I'm going any further even if I do somehow come into enough money to afford more features.

Michelle Singletary: Good for you!


Washington, DC: Hi Michelle - I love your column and seems so simple to be financially fit but yet so many people struggle.

In the article in your last e-newsletter regarding how the poor pay more - I found it interesting how one man was willing to pay a 10 percent fee to have a check cashing place pay his bill instead of him sending the bill himself. His reason was that "i don't have the time". I think a lot of the folks profiled in that article wanted excuses and someone to blame instead of trying to fix things they could control.

* buy a book of stamps - save 10 percent

* sign up for the FREE supermaket savings card - save $$$ on your supermarket prices

* instead of paying $15 to cash a $300 check - use that $$$ and get a new driver's license so you can use your bank

Of course we know that local corner store or 7-11 will always cost more - hence the term "convenient store". Today's E-Letter: It's the Poor Who Pay More | Poor? Pay Up (By DeNeen Brown, May 18)

Michelle Singletary: I agree. The poor often make choices that they shouldn't. Often it's just out of frustration. When you are working long hours for little pay and riding the bus or walking or just struggling you often don't have the energy mental or physical to do what you need to do to save more.

So it's why I've committed much of my personal time to provide financial literacy training to help the less well off see the benefit of taking the time to save.


Woodbridge: The Madoff thing just came to light only a few months or so ago. How did you get a book out so quickly? Doesn't that take a few years for the research?

Deborah and Gerald Strober: Great question! Using two laptops and two telephone lines, we worked at least nineteen hours a day for twenty days. Then, thanks to the efficiency of our publisher, the book was quickly put into production. We continue to follow the story on our website, and our book has been updated to reflect Madoff's guilty plea.


Arlington, Va.: Michelle, I am wondering if you have had a chance to read the article by Edmund Andrews in the NY Times Magazine this Sunday about how he ended up in debt despite a big salary due to poor financial decisions (including a house he couldn't afford)

Michelle Singletary: As I said I have read it. But hey why don't those of you who have also e-mail me and let me know what you think.

It's hard not to judge him from HUGE mistakes but it's also interesting that given he should have known better he too fell for the use debt as leverage thing, borrow as much as you will all work out


RE: For 1st time homebuyer: No, no no. Replacing paneling and carpet (unless it's a hazard to your health) is a WANT, not a need. : YEEEESS! Replacing the paneling is a NEED because the paneling doesn't have insulation or dry wall behind it!!

Michelle Singletary: Okay.


Dupont Circle: Hi Michelle, I just wanted to thank you for doing what you do. I've been paying down student loans and have no other date. The more I read from you the more I agree and you influence me on small ways too. Just yesterday I found something I wanted on I checked my checking account online and realized it was getting low for the month and I didn't really need the product. It's not my first instinct yet, but you really are helping me learn to save. Thank you.

Michelle Singletary: You are so welcome!


Fairfax County, Va.: Hi Michelle, Two questions/comments. My younger sibling is going to prom this month and the expenses are out of control. He has a job and is paying for it himself, but I still think the whole thing is crazy. I especially think a limo is unnecessary but he says everyone is going in a limo. I went to prom a long time ago and my date was very generous, but the whole thing is driving me nuts.

In relation to that, he needs to find a way to pay the estimated family contribution for college this fall. He's going to work all summer but I wonder if anyone has ideas on how to appeal financial aid awards. We appealed but I doubt we're going to get anything. Thanks.

Michelle Singletary: Well, your sibling will just have to learn the hard way. Or he may have decided spending all that money for the prom rather than helping with the college fund is worth it for now.

So to teach him you shouldn't or your parents shouldn't give him the extra money he needs come fall. let him work like a mule to save it up and going forward he may weigh such spending in the future.


Alexandria, Va.: No question here, just some comments. With the recent credit card legislation, I have read lots of claims along the lines of "fewer people will be able to get credit". The appropriate followup response of "duh, that's the whole point, and is something that needs to happen" is almost non-existent (both from the media and from politicians). The later group obviously doesn't want to tell their constituents that the jig is up, that they shouldn't have ever gotten the credit they did, and now those privileges are being revoked. But someone needs to do so.

Certainly some members of society have demonstrated that they can act responsibly when using someone else's money. Many have not. I just wish that people with an audience said as much more often.

Everyone seems to think that having access to credit is a right, and few people seem to accept personal responsibility for their mistakes (whether they were duped or not is borderline irrelevant). We have become a society of complainers, always looking to scape-goat the neighbors, while riding high in our little delusional self centered worlds.

Michelle Singletary: Good points. Made them in a recent column.


Bless you on cell phones:: Loved your column this morning (and a bit frightened and dismayed by it as well!). I'm in my mid-40s, no kids, and no cell phone. Friends, siblings and co-workers don't get it. "You don't have one yet?" As though somehow my life is missing something because I don't have a cellphone (don't have cable TV either). They follow that question with "Well I NEED one because -fill in the blank]." Yes, I understand they serve a purpose. Yes, I understand the importance in an emergency, but like you, I hear most conversations on the bus or train as completely inane. For years, my dad called from his office: "I'm leaving now, can someone pick me up at Metro in 35 minutes?" Worked every time.

I have a phone at home. I have a phone at work. Living in an urban area, I still have access to pay phones (called my boss from Metro this morning because I was running late. Had 50 cents, had a pay phone, what am I missing?) I check on my elderly parents several times a week, by phone and personal visits. Maybe twice a year, do I think "Wow, a cellphone would have helped me."

The line between want and need has definitely blurred. And for all our "connectedness", society is the lesser for it. But my wallet isn't hurting. Necessity or Luxury? Please Redefine. (Color of Money, May 21)

Michelle Singletary: Amen!


Washington, D.C.: A gentle bit of suppressed laughter here at some of the Post reporters advice or examples of "frugality" especially, "Small Change." The latter saves money by spending $150.00 at J.Crew to avoid shipping costs, planning on returning some of the items. The column also had other wonderful money-saving tips, such as: bringing one's own wine to restaurants, restaurant specials and coupons, and how to economize when taking taxis. I have always been skeptical of claims that "The Media" are mostly upper-middle class, but now I believe it.

Many Americans are worried about putting food on their tables and making the next mortgage payments. And, these people are worrying about maintaing their weekly or biweekly restaurant visits???

Michelle Singletary: here....but hear you....feel you


Debt Is Bondage: Michelle,

You are right and the MBA's are wrong. Doean't matter how elite or Ivy League they are.

Michelle Singletary: You would think I wouldn't have to still argue this point given the current economy.


Bloomfield, Mich.: -I worked in the investment field for over 30 years - both with large institutional investors and individuals.

-Our current transparency and disclosure requirements are wholly inadequate. I recommend the the following as improvements or areas that need work:

1. Financial companies should be required to disclose all fee levels, to the penny, and to whom they are paid.

2. All professionals who touch or certify transactions involving the funds should be listed by name and information regarding their business background and how to obtain more detailed information - should be a mandatory requirement.

3. The SEC should be fully funded by the Federal Gov - they should take no money directly from the firms they oversee.

4. We need a Federal law that requires the Ratings Agencies to adopt and utilize only independent actuarially approved methods for calculating a AAA rating. The methods used should be clearly identified and available to investors.

5. The SEC should work with FINRA to develop a format for Investment Prospectus that standardly puts the information on specific pages, mandates minimum detail on expenses and fees, list all fund managers, custodians, record-keepers and Accountants - and minimum information requirements for each.

Michelle Singletary: Good suggestions. Thanks.


Chicago, Ill.: Michelle, hope you can help me think about this question. My husband just graduated from medical school and will need to move to complete his residency. For employment reasons I am staying here - I earn a decent salary and like my job. We have two kids who are in daycare. We have a 401(k) and 2 Roth IRAs that get funded every month (about $20k/year) and then we save $100/month in each of our kids' 529. The problem is that we can't afford for my husband to live in the other city! Well, we can - we can cut back on daycare and send them to a different place, though they've been here 2 years and we love it (this would be my last resort choice as I don't want them to bear the burden for my husband's and my choices). We can cut back on saving for our retirement and in their 529s. Our mortgage payment is really low, lower than what a 2-bed apartment would rent for, so I don't think moving is an option. My mother has offered to pay my children's daycare for the duration of my husband's residency so that we can afford for him to live (we'd either pay her back after he starts working as a doctor or we'd take it out of our inheritence). But I'm reluctant to take money from my family - I'm a grown woman, for pete's sake! What would you do in my situation? Besides mortgage, we have my husband's student loan debt from med school (repayment starts in November). No CC, car, or other consumer debt.

Michelle Singletary: Stop saving so much. I know.

But you can't do it ALL right now. So cut back on the retirement and school savings just for now...

Don't take your mom's money, especially if she "needs" it back. If you can find nice, affordable less child care that you are comfortable try it.

And when you hubby becomes a doc, live like you are living now until you get all that massive debt paid off. Then you can catch up on all your savings.


Laurel, MD: Your book is great. I particularly like how you looked at this 'catastrophe' from several perspectives. It really made the reader think a little deeper about the situation and all of those involved.


Deborah and Gerald Strober: Thank you. We were interested from the beginning in Madoff's victims, especially the so-called little people whose lives have been so radically changed. We are concerned now over their futures. Will they ever recieve adequate compensation with which to rebuild their lives? The search for the $64 billion that the government claims is still out there will likely take years. Victims are now caught up in the legal wrangling between the court -appointed bankruptcy trustee and the government. That is why we are calling for the appointment by the White House of an independent victims' advocate.


RE: So you are disagreeing with me that you should have saved the money first rather than borrow it from the government? : YEEESSS! I need to make my house more comfortable and that $75k is a interest free loan, I need! On my salary I will NEVER be able to save $75k.

Michelle Singletary: So if you can't save the money, who can you pay it back?

No use in the two of us arguing. You did what you thought was right. I'm just trying to keep as many people as I can from relying on debt.


Atlanta, Ga.: Hi Michelle, Why is there not more outrage over Madoff and all of the other finacial frauds that are openly ripping off people?

Deborah and Gerald Strober: We believe that there is great outrage. However, due to the complexity of the case, it is often difficult for the public to obtain a clear picture of the extent of Madoff's crimes. That is one of the reasons why we are calling for a victims' advocate, an individual of unimpeachable integrity who is not part of the system.


Bethesda, Md.: Interesting column this morning. My family is secure financially (not Bill Gates, but no debt other than mortgage, fully-funded retirement and college savings, emergency savings, automatic charitable contributions, etc.) but I still think about whether the things and service we use are needs or wants. When money is not a central isue, and you have the survivial basics covered, what do you consider a "need"?

Michelle Singletary: When you have the basics WELL covered you can fulfill your wants. That's when it is okay.

And hopefully you are also using some of that extra cash to give to charity.


Boston, Mass.: Michelle

Trying to get this in early. I recently went into business for myself, after being laid off from a consulting firm. June will be my first time paying estimated taxes. I am essentially putting 1/3 of my earnings in a separate account to pay these taxes. After looking at the IRS website, is there a way to electronically pay the taxes, or do I have to mail the voucher with a check?

Michelle Singletary: That's a good question and I'm not sure. Call the IRS and find out.


Washington, D.C.: Hi Michelle, What's happening with education loans? Is there any hope that students may be helped (as have homeowners)? What's the best resource to find out how to combine several grad student loans for a lower interest rate? Thanks!

Michelle Singletary: The web site is a good resource.


Laurel, Md.: The major lesson that Bernie Madoff's thievery teaches is not to place all of your investments in one place. In the book, one of the blog contributors wrote that because she and her husband did not have alot of money to invest, they could not diversify their investments. This is not true. If you have enough to invest, you have enough to diversify.

Michelle Singletary: Truly that is one of the lessons of this awful crime.


Washington, DC: Re: Madoff, Jews, and investing: There are over 5 million Jews in this country, and as a Jew, I never heard the name "Madoff" until a few months ago. Even so, when I invest, I use the Peter Lynch, the former Fidelity Magellan Fund manager philosophy: If you don't understand how a company makes money or what it does, or you can't illustrate the concept with a crayon drawing, you have no business buying the company's stock.

Deborah and Gerald Strober: We had not heard of Madoff either until the day of his arrest. Unfortunately, when people are obtaining high returns on their investments, they do not always analyze how their profits could be so high. Madoff relied on that aspect of human nature as he perpetrated his massive fraud. It is really astounding that so many seemingly sophisticated investors fell under his spell. Of course, people who invested in feeder funds had no way of knowing that their money was being moved into Madoff's clutches.


re; Michelle Singletary: For me, I just can see how he did this all on his own. The paperwork alone would require a team. : Thats not true. If Madoff had been buying stock/bonds it would have been an issue, a huge one as you point out. The hedge fund/money management industry has a list of perfered accountants(Madoff was not on the list). There were many instutitions that would not invest with Madoff for that reason. As much as people want to blame the SEC, its not their fault. With that being said, i m not saying his wife or kids didnt know the facts. Madoff has been living in this hell for years. Back in 99 or 00 Charles Schwab and Goldman were looking to expand their market making businesses. They both approached Madoff, Bernie knew he could not open his books, because the gig would be up. The price tag for that business at that time would have been about a Billion dollars!

Michelle Singletary: It is true that he had to have people preparing the paperwork.

Even tho he didn't have real trades, he had to send out reams of paper to clients specific to their accounts. He had to paper fake all that he was doing and that little old man could not have done that himself.

And it may not have been the SEC's fault that a Madoff happened but the agency didn't do all it could have to stop it either.


For Chicago...: ...who wrote, "The problem is that we can't afford for my husband to live in the other city!"

Husband needs to settle for a cheaper place to live. What you two can't afford is having to pay two housing expenses each month (your mortgage, his rent). Can your husband get a room in an elderly couple's house, perhaps for free in return for a little home/garden maintenance? They, in turn, might come to love him like a son and be kind to him (the occasional meal, etc.).

Michelle Singletary: Good suggestions. Thanks for sharing.


Baltimore, Md.: Re Bernard Madoff: I have not yet read your book, but just read the issue of Fortune that discussed the Madoff fraud in detail. The thing I don't understand is that here was a man who had achieved significant success before he started running his Ponzi scheme, so what drove him to do this? A number of pieces I have read indicate that Madoff has some sort of obsessive/compulsive disorder (everything in his offices had to be grey or black, rugs had to be adjusted precisely or he would go nuts, etc.) but that doesn't explain engaging in the type of fraud that was bound to explode one day. He, of all people, should have known Ponzi schemes are inherently unsustainable. So, do you have any insights into the man's psychology? Thanks.

Deborah and Gerald Strober: We believe that he has a criminal mind and that he initiated his fraud decades ago. Surely he realized the dangers inhetent in such a scheme. The possessor of a criminal mind, however, will always be tempted by opportunity, whatever the risks. We have no doubt that, given the opportunity, Madoff would once again perpetrate economic terrorism.


tina : FICO score 830. I pay the Visa bill (only one Visa card) every month, own my home, have a car loan and that's all the debt. I had an "extra" Visa card for a year free. When it came time to pay and annual fee I called to cancel it. In the past I would have expected them to waive the fee again, not so this year! They tried to tell me cancelling would have a negative impact on my "Wouldn't you like to use your 26,000 credit limit to take a vacation or something"...honestly, they have nerve. I cancelled it, I refuse to pay for a credit card.

Michelle Singletary: Good for you for standing up to the pitch.


Miami Gardens, Fla.: Hello, Michelle: I only make about $37,000 a year, and I have about $2,700 in credit card debt at an average of 23 percent interest rate (made bad choices in college). Additionally, I have $62,000 in student loans at about 3.5 percent. Then there are other, day-to-day expenses. I am paying everything on time, and nothing's in arrears. Currently, I'm only saving about 10 percent of my income, but I feel that I am not saving enough, should I cut back on doubling up on my student loans and help beef-up my savings instead with the "doubling-up-on-student-loan" money?

Thank you!

Michelle Singletary: If you feel your job is pretty secure and you have enough savings for a few months, yes, keep aggressively paying down the student loans.

However, I would suggest you just make the minimum on your student loans and concentrate on getting rid of the credit card debt first. First not because of the interest rate but because they carry the lowest balances.

Once you pay off the cards, then concentrate heavily on the student loans.


Madoff and Jewish Institutions: I work in the world of Jewish communal service and it's been a nightmare how many organizations have been laid waste by this. A generation of Jewish philanthropy has been destroyed and important social services that benefit communities beyond just the Jewish world have been lost. My hope is that at the very least a lesson has been learned in the wake of this scandal...that just because someone is "one of us" doesn't mean you don't still ask tough questions and do your homework.

Deborah and Gerald Strober: Amen.


College Park, Md.: Hi Michelle, am a newbie to your columns -- love them and your advice!

You know, I'm thinking it's a shame that people like Big Mama, and my grandpa and grandma (who went through the Great Depression) couldn't get together and offer dvice/mentorship/classes for young people who came from the mindset that luxuries are a Given, not just that--luxuries. They sure would have some advice to give! Unfortunately, there just aren't too many of them left...

Thanks, keep up the great work!

Michelle Singletary: Welcome new reader and thanks. But Big Mama is sort of teaching...just thu me.


Charles Town, W.V.: I am a full believer in not carrying debt. Am paying a chunk extra on the mortgage principle each month and will hopefully be out of debt 100 percent within 6 years. I use a credit card, but pay it off twice/mth when I pay bills at payday.

Then there's my hubby.... We had the ceremonial "cutting of the cards" two weeks before the wedding (or it was off), another 5 years to get his whopping debts paid off (including the back 10 years of taxes to the IRS. Sigh.) I have him on a weekly allowance for Starbucks and occasional snacks/lunches, but have to keep him away from the checking accounts or credit cards or we'd be drowning in debt again within months.

BUT... we must have the cell phones, because all the advance life planning in the world doesn't work when the DH loses the list, forgets the errands, etc., then calls me on the phone for a reminder of what he was at the store to get. What I really wish was that our internet connection wasn't tied to our phone line, then I could just ditch the land line and use the cells only. No bells/whistles, no texting, just free unlimited calls between the two of us. And our teenage daughter doesn't get one until she gets a job and can pay for her portion of the family rate (an additional $15+/mth).

My point being that no matter how good I am with finances, I'm still only one member of the family, and it's really hard to keep a lid on spending without keeping a strong grip on those purse strings!

Michelle Singletary: Yup it is hard when you are the one pushing the saving cart. But keep the faith!


re: Madoff: Having been working on Wall Street for the past 15 years, I had heard Madoffs name. His market making business was know as one of the biggest front runners (not a good thing!) on Wall Street.

Michelle Singletary: Too bad others didn't recognize it too. I've read so many of the stories of the people who lost money --people who worked hard all their lives. How Madoff could do this is beyond my comprehension.


San Bruno, Calif.: How would you determine the guilt or innocence of the feeder fund managers?

Deborah and Gerald Strober: The government is currently examining the issue. There is a question as to whether the feeder fund managers performed adequate due dilligence before becoming involved with Madoff. Beyond that issue is the question of collusion. We are not impressed by the manner in which the government and the regulatory agencies are proceeding.


Michelle Singletary: As usual there are way more questions than I have time for. Thanks to all you participated in the chat. Great questions and comments (for and against my viewpoints). I love a good debate. Makes us all think.

Hope you join me next time. Take care.


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