The SEC misses Madoff – not once, not twice but five times in 16 years?
Per the Washington Post “But in each instance, inexperienced officials, at times ignorant of other agency probes into Madoff, took his explanations at face value and did little to verify them.“
Why would anyone – no matter how inexperienced – take a potential criminal at face value? I mean no one intentionally tries to fail at their job do they? Is there any upside to that?
The answer goes back to Re-Thinking Thinking – or understanding how we ACTUALLY perceive and judge because it isn’t how we think – or have been taught – that we do. We believe that as children we rely too much on our emotions and as we mature, we become more rational and more objective. Well that may be true on the surface – but essentially only on the surface.
Most of our analysis is done below the surface of our consciousness – and most of it has to do with how we are feeling (or being made to feel) and we don’t even know it. In the SEC’s case, they were victimized by Madoff’s charms in the same way everyone else was. His extraordinary ability to make people feel good – to trust him – worked its magic on the young, inexperienced (maybe intimidated) investigators the same way it worked on his friends at The Palm Beach Country club and his feeder funds and his charities and his…
See the whole sordid affair is a spectacular object lesson in the reality of how we actually make decisions.
It isn’t time to just be out-raged at the SEC (although that is fair). It is time to use that out-rage to actually learn that the real job in risk psychology is to stop fooling ourselves and start being realistic about how we really think – and to Re-Think Thinking.