As Rep. Ed Royce, R-Fullerton, who is on the subcommittee, told me over the phone Monday, even though Markopolos spelled out Madoff's problems in painful detail, SEC staff "were incapable of unraveling" the Madoff mess. And the SEC and other regulators investigated Madoff at least eight times over 16 years -- without matching the findings of Markopolos and friends.

Royce wants to re-engineer the SEC, using as a model the British Financial Services Authority, which hired investigators with experience in the financial sector after the collapse of big bank Northern Rock in 2007.

The Madoff debacle also shows an enormous failure in the marketplace among the overpaid big shots who are supposed to understand complex financial instruments. "We never conceived that any high net worth professional investor would have 100 percent of their money invested in hedge funds," quoth Markopolos. Or that charities and individual investors would put all their eggs in Madoff's slimy basket.

Markopolos also figured that "hundreds of highly knowledgeable men and women" had figured out that Madoff was a fraud, but did nothing about it. More failure.

The media failed, too. Markopolos had extensive contacts with a Wall Street Journal reporter, who was ready to run with an investigation, but whose editors never seemed to give the green light.

Our Betters in Europe also got caught in Madoff's snare. Markopolos said that he realized Madoff was operating a Ponzi scheme during a 2002 trip with French and Swiss bank and hedge fund biggies who "bragged" about how Madoff had closed his funds to new investors, but granted their money "special access."

Madoff's "masterful use of a 'hook' by playing hard to get and his false lure of exclusivity" had them gulled. Flattery emptied their purses.

And so no one listened to Harry Markopolos -- even the people who were paid to.