Certainly many details differ. But, as TPM Reader EG notes, the story of Richard Whitney (an overview of whose life I’ve copied from his wikipedia entry) was at least broadly reminiscent of the unfolding story of Bernard Madoff …

Richard Whitney (August 1, 1888 – December 5, 1974), was an American financier, president of the New York Stock Exchange 1930-1935, and a convicted embezzler.

…

At the same time that Richard Whitney was achieving great success, his brother George had also prospered at Morgan bank and by 1930 had been anointed as the likely successor to bank president, Thomas W. Lamont. While Richard Whitney was assumed to be a brilliant financier, he in fact had personally been involved with speculative investments in a variety of businesses and had sustained considerable losses. To stay afloat, he began borrowing heavily from his brother George as well as other wealthy friends. After obtaining loans from as many people as he could, Richard Whitney turned to embezzlement to cover his mounting business losses and to maintain his extravagant lifestyle. He stole funds from the New York Stock Exchange Gratuity Fund as well as from the New York Yacht Club where he served as the Treasurer. In addition, he stole $800,000 worth of bonds from his father-in-law’s estate.

Having retired as President of the NYSE in 1935, Whitney remained on the board of governors but in early March 1938 his past began to catch up to him when the comptroller for the NYSE reported to his superiors that he had established absolute proof that Richard Whitney was an embezzler and that his company was insolvent. Within days, events snowballed and Whitney and his company would both declare bankruptcy. An astonished public learned of his misdeeds when on March 10 he was officially charged with embezzlement by New York County District Attorney Thomas E. Dewey. Following his indictment by a Grand Jury, Richard Whitney was arrested, and eventually pleaded guilty. He was sentenced to a term of five to ten years in Sing Sing prison. On April 12, 1938, six thousand people turned up at Grand Central Station to watch as a scion of the Wall Street Establishment was escorted in handcuffs by armed guards onto a train that delivered him to prison.

Sen. Ken Salazar (D-CO) will be President-Elect Obama’s nominee for the Interior Department.

(To be clear, Interior is a very big deal for Western states like Colorado. I’m well aware of that. But I continue to be surprised how many relatively young senators — Salazar is 53 and he was elected in 2004 — are willing to give up their seats to serve in Obama’s cabinet.)

From the Strib …

Four of Minnesota’s biggest legal guns have cast their shadows over two lawsuits that have drawn the attention of the FBI.

They have been retained by U.S. Sen. Norm Coleman; his wife, Laurie; Jim Hays, her insurance company employer; and Nasser Kazeminy, a multi-millionaire friend of the Colemans who is accused in the lawsuits of sending them money in 2007 through Hays’ company. Coleman’s Senate ethics form reports no such payment.

The Minnesota canvassing board gets down to the nitty gritty today, weighing in on the ballots challenged by the Franken and Coleman campaigns. That and the day’s other political news in the TPM Election Central Morning Roundup.

Politico has more about the Madoff scandal:

But lobbying is just a piece of Madoff’s influence in Washington. His family has contributed nearly $400,000 to political committees. And his niece, Shana Madoff Swanson, who serves as a compliance attorney at his firm, is married to a former high-ranking Securities and Exchange Commission official, Eric Swanson.

Swanson was the assistant director in the SEC’s Office of Compliance Inspections and Examinations’ market oversight unit in Washington. According to his biography, Swanson “supervised and conducted inspections and examinations that involved a wide range of issues including best execution, order handling, insider trading [and] market manipulation.”

The SEC has come under criticism for not following up on tips that Madoff’s investment returns seemed suspicious. Mr. Swanson left the SEC in 2006. He married Madoff’s niece the next year. He now works at a firm called BATS Exchange, which describes itself as “the third-largest stock exchange” in the United States, behind the New York Stock Exchange and Nasdaq.

A spokesman for BATS said: “Eric Swanson worked at the SEC for 10 years and did not participate in any inquiry of Bernard Madoff Securities or its affiliates while involved in a relationship with Shana, whom he met through her trade association work in the industry. They were married in 2007. Throughout his career, Eric has displayed the highest ethical standards and his reputation has been — and continues to be — above reproach.”

At the SEC, Lori Richards, director of compliance inspections and examinations, said Swanson was a member of an exam team that reviewed the Madoff broker-dealer in 1999 and 2004, but did not participate in the 2005 exam of the broker-dealer firm by the New York office.

“In any event,” she said, “he SEC has very strict rules prohibiting SEC staff from participating in matters involving firms where they have a personal interest. Subsequently, Mr. Swanson did not work on any other examination matters involving the Madoff firm before leaving the agency.”

Hillary’s office tells that she won’t be weighing in publicly on who should be her successor in the Senate.

The other point to be made here is that a junior senator isn’t likely to have much sway in choosing her successor. Chuck Schumer, on the other hand …

A pro-business group is sinking more than $1 million into a TV ad set to run in Arkansas, Nebraska, North Dakota, and Colorado, linking Gov. Blagojevich to Senate Democrats and “union bosses.” All timed to sway opinion on labor’s No. 1 legislative priority: the Employee Free Choice Act.

Over the last few days I’ve been chatting with various folks who did business in one form or another with Bernie Madoff’s firm. And it seems clear that there were numerous aspects of his operation — not just the weirdly consistent returns, but the mechanics of the operation — that gave ample reason to question what Madoff was up to. These inside views — or views on the margin — are very helpful in allowing us to piece all this together (of course, your confidentiality will be guaranteed). But for those who are keeping track, the oddest thing about the story so far is how the SEC was alerted repeatedly over the last decade of potential problems with the investment arm of Madoff’s operation. They actually did open a few looks into his firm. But they never seemed to look in the right places. They’d look at the non-problematic part of the operation and not the part on the 17th floor where all the weird stuff was going on. Or they’d push for changes that would give them greater access to his books and then never follow up on that greater access.

Astronomers can’t see black holes directly. They identify them by inferring their existence by their gravitational effect on nearby celestial bodies. And I’m similarly curious what’s the gravitational force that appears to have kept the SEC from giving Madoff a good hard look.

Rep. Don Young (R-AK), ousted as ranking member of the Natural Resources Committee, tells Politico he has a plan: “. . . what they don’t know is, I’m going to go back and kick their ass.”

Like with children, I don’t like to play favorites with the Book Clubs we host over at TPMCafe. But this one, because of the personnel and the especially because of the timeliness of the subject matter is one you really don’t want to miss. We’re discussing the rereleased version Paul Krugman’s The Return of Depression Economics and Crisis of 2008. We’re discussing it with Krugman, Bob Reich, Brad DeLong, Mark Thoma, Susan Feiner, Jo-Ann Mort, Dana Chasin and Dean Baker. Click here to join the conversation.