o The Need for Independent Auditors

Here is a sure way that no further Bernie Madoff ponzi scheme will not exist. And it doesn't rely on the under funded, under staffed, under educated SEC.

If a company or individual wants invest $1m or more in a hedge fund or private investment, they must first get an independent audit from one of a list of government approved accounts. No accountant can be used twice unless all other auditors are cycled through. The cap on how much the audit costs is $10k. Consider it a one time payout of $10k for insurance.

Lets take the case of Bernie Madoff. Assume he had 100 investors that put in over $1m to his fund. Assuming this rule were in place, his fund would have gone through several independent audits from several different accounting firms. Any red flags would have been raised years ago.

o New Recovery Bill Passed

The $819 billion American Recovery and Reinvestment Act passed the House of Representatives on January 29th, 2009.

o Shadow Banking System

Its scary to think that funds moved around the world by hedge funds and foreign governments can be withdrawn from the US system and collapse the economy in days. Pimco's Bill Gross refers to it as the "shadow banking system" on his website. In September 2008, UK Northern Rock Bank, Washington Mutual, Hong Kong-based Bank of East Asia all had a run on the bank resulting in the collapse of the first two.

Representative Paul Kanjorski:
http://www.youtube.com/watch?v=-xKPcyvlfnc

Bill Parish:
http://www.youtube.com/watch?v=WshxmT3Fawo