Henry Kaufman, the Wall Street economist and investor legendary for his accurate predictions, wasn’t clairvoyant when it came to Bernard L. Madoff.
The Wall Street Journal reported Wednesday that Kaufman, known as “Dr. Doom” for his pessimistic but accurate forecasts, lost several million dollars by investing in Bernard L. Madoff Investment Securities.
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That makes him one of hundreds of victims of what Madoff himself has characterized as a Ponzi scheme that may have lost $50 billion.
Kaufman, 81, told the Journal that he was “shocked” by Madoff’s alleged scheme.
“You ask yourself, how could that happen?” he said. “He was a reputable individual.”
At the same time, Kaufman said that he had no more than “a couple percent” of his net worth tied up with Madoff.
Overall, Kaufman said he made money on his investments in 2008. He is worth several hundred million dollars, the Journal reported.
Like many other people who have lost money they invested with Madoff, Kaufman is Jewish, as is Madoff.
Kaufman fled Nazi Germany as a boy with his family and arrived in the country unable to speak English. He then excelled academically, eventually earning a Ph.D.
After a stint as a researcher at the Federal Reserve Bank of New York, Kaufman joined what was then Salomon Brothers & Hutzler in 1962.
He established his reputation as a sometimes gloomy oracle by predicting the 1966 credit crunch. Later, he accurately predicted a rise in interest rates and a fall in bond prices.
Kaufman was at Solomon Brothers until 1988, becoming a managing director and a member of the executive committee.
He’s now president of Henry Kaufman & Company Inc., a financial consulting firm. He was a director of Lehman Brothers Holding Inc. until that company’s collapse last year.
Kaufman has given millions to a variety of causes and institutions, including New York University, where he earned his undergraduate and his doctoral degrees.
In 2004, he gave $10 million to the Institute for International Education to be used to help persecuted scholars throughout the world.
On at least one occasion Kaufman’s philanthropy has overlapped with that of Madoff.
In 2001, Kaufman endowed an academic chair at Sy Syms School of Business at Yeshiva University, a Jewish institution.
At the time, Madoff was serving on Yeshiva’s board of trustees.
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