EDITORIAL Madoff is just tip of the iceberg

Finance capital went to confession, told the judge its sins, and he administered the penance — 150 years in the clinker for 79-year-old Bernard Madoff.

The stain of sin on the decent soul of Wall Street’s investment adviser operation was removed.

Or so they would have us believe.

If Madoff was just a reincarnation of Satan who swindled investors of billions of dollars to pad his own pockets, things would not be half as bad as they really are.

More than a lone “sinner,” Madoff was one of the architects of the modern system of finance capital, and the founder and chairman of Nasdaq.

He wrote many of the rules and regulations that still govern the activities of the finance industry.

He did this as he served on Securities and Exchange Commission advisory councils and worked closely with SEC chairmen.

Throwing Madoff in jail forever will do nothing if strong new rules to regulate investment advisers like him are not enacted.

Under the radical deregulation era of the Bush administration, derivatives, hedge funds and private investor groups became free to do whatever they pleased. The argument was that professional financiers dealing with sophisticated investors don’t need government watching. If the investments collapsed, it was said, it was the money of these sophisticated investors that was in danger and there would be no innocent people for the government to protect. So the Bush administration destroyed whatever was left of finance industry rules enacted by President Roosevelt after the Great Depression.

When those investments did collapse, first with AIG and then with Madoff, the homes, life savings and jobs of ordinary American workers were lost because the private investment contracts involve the money of everything from charities to unions to pension funds and insurance policies — all of which involve or are owned by working people.

Congress must act. Strict new riles that regulate investment advising must be included in any reform of the financial system.

Madoff was only the tip of an enormous iceberg that must be melted.