The extraordinary US$50 billion Bernard Madoff fraud has forced banks as widespread and high profile as HSBC, Royal Bank of Scotland, BNP Paribas, Santander, Natixis and Nomura to declare tens of billions of dollars in losses in the "giant Ponzi scheme".

However, the big Australasian banks have yet to declare any exposures and are not expected to. The heavy losses by Northern Hemisphere banks is expected to force yet more capital raisings by banks in a market already already short of cash to bolster balance sheets.

Questions are now being asked about how 'fund of fund' hedge fund managers failed to miss the warning signs around on Madoff, who had not filed accounts for this fund for years, had not registered it, and was using auditors no one had heard of that ran out of a small suburban office.

The SEC's inability to spot the fraud by one of Wall St's most respected figures is also under scrutiny.

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