I have been reluctant to write about the Madoff scandal because it hits so close to home. My children’s school, my synagogue, and the college I attended all lost substantial amounts of money in their endowments to the scandal. It is just shocking and saddening to see an alleged crime harm so many worthwhile institutions.

Certainly, banks too have suffered from this $50 billion calamity. A review of the list of victims shows that about a third were banks. So far, banks have lost about $11.3 billion to Madoff. I am sure that number will rise, perhaps breaching the $20 billion mark.

But what is so striking about the list of banks is that it does not include one American institution. Rather, the banks are largely European, with a sprinkling of a few Asian banks. And these are not just your run-of-the-Main-Street banks either. Many are old-world, private European institutions, like Union Bancaire Privee, Reichmuth & Co., Bank Medici, and Neue Privat Bank. These are the banks we are not supposed to be able to name on BankInnovation.net. Or put another way, these are the banks with brands that center on the fact that they do not have brands.

These are also banks that operate in an old-world manner, one in which who you know is far more important than what you know, or whether you employ an auditor or not. I heard a remarkable story over the weekend. A friend of mine told me of a wealthy American investor who had visited with Madoff four times over the course of many years. In each instance Madoff pitched him on investing. The story sounded good so this investor would end each meeting with the following line: “I’ll have my auditors call you.” To which Madoff reportedly replied, “We don’t do that here.”

For years the Swiss private banks and other similar institutions “didn’t do that here” either. In a year when so much has seemed “wrong” about American banking, I see the results of the Madoff scandal as a sign of what is right about the industry. It is not solely a “who you know” enterprise – although who you know matters. This is a discipline of underwriting and investment that we should laud and appreciate.

You can find a spreadsheet of the people and companies victimized by the Madoff scandal here.