Advertising

The Seattle Times Company

NWjobs | NWautos | NWhomes | NWsource | Free Classifieds | seattletimes.com

Business / Technology


Our network sites seattletimes.com | Advanced

Originally published Thursday, January 1, 2009 at 12:00 AM

Comments (0)     Print

Economist known as "Dr. Doom" didn't predict Madoff trouble

Henry Kaufman, the former Salomon Brothers chief economist whose bearish views decades ago earned him the nickname "Dr. Doom," lost several million dollars with Bernard Madoff, making him one of the most prominent Wall Street figures to emerge as a victim of the alleged Ponzi scheme.

The Wall Street Journal

Henry Kaufman, the former Salomon Brothers chief economist whose bearish views decades ago earned him the nickname "Dr. Doom," lost several million dollars with Bernard Madoff, making him one of the most prominent Wall Street figures to emerge as a victim of the alleged Ponzi scheme.

Kaufman, 81, had the money in a brokerage account with Bernard L. Madoff Investment Securities for more than five years, he said in an interview Tuesday.

Meanwhile, a federal bankruptcy judge in Manhattan overseeing the liquidation of the Madoff firm on Tuesday approved a transfer of $28.1 million from one of Madoff's bank accounts to the court-appointed trustee of the firm, who said the funds will be used for satisfying customer claims. On Wednesday, Madoff is expected to turn over details of his personal assets, liabilities and accounts to government investigators.

Kaufman earned the Dr. Doom nickname as a result of his consistent predictions while at Salomon Brothers in the 1970s and early 1980s that interest rates would rise and bond prices would fall.

More recently, Kaufman was a director of Lehman Brothers and was chairman of the Lehman board's finance and risk committee before the Wall Street firm's September descent into bankruptcy.

Like many other Madoff investors, he also is a prominent supporter of Jewish institutions, including Yeshiva University. In an interview Tuesday, Kaufman said his Madoff loss was "no more than a couple percent of my entire net worth" and "immaterial to my financial well-being."

"Fortunately my net worth is higher than it was at the end of last year — after working very hard to achieve that," Kaufman said. His net worth is several hundred million dollars, according to a person familiar with the matter.

Despite the Madoff losses, Kaufman made money in 2008, he said, in part by shorting the Standard & Poor's 500.

Kaufman said he didn't recall who introduced him to Madoff but said he trusted him with his money and was "shocked" by the alleged fraud. "You ask yourself, how could that happen? He was a reputable individual."

Madoff's "background, his associations" were reasons for comfort, Kaufman said. He called the alleged fraud "a terrible situation" and "another reflection of loose credit, of very rapid credit expansion ... which tends to breed all kinds of excesses."

In the filing Madoff is to make Wednesday to the Securities and Exchange Commission, he also is expected to provide names and locations of entities that held accounts or assets for his firm. The filing won't be public.

Before his arrest, Madoff allegedly told his sons that there was $200 million to $300 million left in his firm, according to court documents and people familiar with the case.

Meanwhile, the court-appointed trustee for the Madoff firm, lawyer Irving Picard, will mail claim forms to the firm's customers by Jan. 9.

Customers may be eligible for relief from the Securities Investor Protection Corp., a securities-industry-funded nonprofit group that can provide as much as $500,000 to customers of failed brokerages.

Copyright © 2009 The Seattle Times Company

More Business & Technology headlines...

Print      Share:    Digg     Newsvine

Comments
No comments have been posted to this article.

advertising


Get home delivery today!

UPDATE - 09:46 AM
Exxon Mobil wins ruling in Alaska oil spill case

UPDATE - 09:32 AM
Bank stocks push indexes higher; oil prices dip

UPDATE - 08:04 AM
Ford CEO Mulally gets $56.5M in stock award

UPDATE - 07:54 AM
Underwater mortgages rise as home prices fall

NEW - 09:43 AM
Warner Bros. to offer movie rentals on Facebook

Advertising

Video

Marketplace

Advertising