A task for someone with more savvy about finance than me:

I am hoping that someone can write an explanation of how the banks and Bernie Madoff's actions are similar. A simple explanation that can be disseminated to others who don't have a background in finance to understand all the cutesy jargon. I don't think that the big banks and ole Bernie are vastly different from each other. Bernie Madoff financing could be a usefel way of talking about this mess to push for more stringent regulatory measures.

Harry Markopolos. I went on a tad bit of a hunt for a link, but all that might answer what you're asking was pretty lengthy. Search by his name and at about 5 or 6 items down (on Google anyway), you should find a 65 page document containing his theory as to what Madoff was doing. He also testified before congress on the matter and indicated then that many more Madoff's were accustom to doing business in the same manner. Just where is Allen Stanford these days?

during his testimony to Congress. If only he were in charge of the SEC.

Madoff reported to people that he ran a semi-private stock-trading investing fund, but he wasn't running any kind of fund at all, he was running a Ponzi scheme in which money from later "investors" was used to pay seemingly legitimate (and large) returns to those who preceded them. He said he traded stocks but in fact he bought and sold no stocks. His was a purly illegal scam right from the beginning.

The banks are an entirely different matter, and one that has been greatly distorted by a clueless press. In fact even to call them banks is misleading in the sense that you and I think of banks as institutions that take in deposits and make loans, a cheerful but deranged dream as well.