SIPC coffers will be emptied by Madoff ... and then some!
A U.S. District Judge on Monday declared that victims of the Madoff scandal are eligible for protection under the SIPC. Since the Madoff empire included an in-house brokerage, the ruling seems to make perfect sense, so in that sense this is more an invocation of presumed federal insurance coverage than a bailout, per se. But, in effect, it's still a bailout. Here's why.
At the end of 2007, as per this financial statement, the SIPC had only $1.5 billion in assets!!
Without a major injection of funds, this Madoff event alone would more than empty the coffers of the SIPC, and so of course the Treasury will have to step in and provide further funding. The Madoff losses, then, will go directly on your bill! Does that make you Mad-off? :(