Hat tip to the TPM Muckraker blog.

Bernard Madoff, now spending the rest of his life in jail, was actually a contender to be chairman of the Securities and Exchange Commission. That's the revelation in this SEC report into the regulator's failure to stop Madoff and why it turned a blind eye to the frauds he was perpetrating.

According to the report, SEC examiners found Madoff to be totally charming and a wonderful story teller. "Madoff made efforts during the examination to impress and even intimidate the junior examiners from the SEC. Madoff emphasized his role in the securities industry during the examination ... Madoff told them that Christopher Cox was going to be the next Chairman ofthe SEC a few weeks prior to Cox being officially named."

The report slams the SEC's enforcement division for failing to verify Madoff's trading with a third party. Clearly, if someone is stealing money they will inevitably create false records to cover their trail. The only way to get some verification of what they're doing is through third party verification. The report also slams SEC officials for not following up glaring deficiencies, instead simply taking Madoff's word that nothing was wrong.

The report concludes: "Despite numerous credible and detailed complaints, the SEC never properly examined or investigated Madofi's trading and never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme. Had these efforts been made with appropriate follow-up at any time beginning in June of 1992 until December 2008, the SEC could have uncovered the Ponzi scheme well before Madoff confessed."

More to the point, Madoff's behavior suggests he had a way with the SEC, even claiming that he was likely to become their boss. No wonder the regulator turned a blind eye.