Santander Settles

At least one of the Madoff feeders appears to be taking some responsibility for its actions (via WSJ):

Banco Santander SA, one of the largest conduits of investor money to Bernard Madoff, agreed on Tuesday to pay $235 million to settle potential legal claims by the trustee of the defunct Madoff firm.

Santander is one of several banks to have offered its clients compensation for losses from the fraud. In its results in April, Santander said that 93% of clients affected by the Madoff fraud had taken up its offer, which it originally valued at €1.38 billion.

While I am glad that Santander and others have attempted to provide some restitution to their clients, I am still concerned by the apparent lack of due diligence that fueled the fire of this Ponzi scheme. Wall Street seems to thrive by creating obscure financial products that are only truly understood by their creators, and then layering those products until investors have very little understanding of the economic reality underlying their investment decisions. The resulting lack of clarity is a perfect breeding ground for fraud.