But, as the debate between the members made clear, the central question Congress will looking over in the coming months: whether it is a lack of regulations or a lack of enforcing existing regulations that led to the failure to detect Madoff's alleged Ponzi scheme.
Most, particularly Democrats agreed with Kanjorski, who noted that the failure of the SEC to detect the alleged scam despite complaints "raised even more troubling questions about the effectiveness of our regulatory process." He added: "Clearly our regulatory system has failed miserably and we must rebuild it now."
And while Republicans like Rep. Spencer Bachus (AL) agreed for the need for a "regulatory system for the 21st century," he said that Madoff's alleged scam may not be the result of a failure of regulation but "a failure to use them."
Whatever the ultimate shape of any new congressional legislation, it is clear that the SEC's inspector general, H. David Kotz, will take a broad look at whether the SEC failed to uphold its own standards.
"There is nothing ordinary or normal about it," Kotz told Congress.
He said that his office's probe -- which began only a few weeks ago -- will look into allegations made to the SEC about Madoff going back to at least 1999 and whether SEC failed to follow its own policies in regulating Madoff's funds. His examination will also look at whether any staff contacts or relationships between SEC employees and the Madoff family impacting any decisions regarding Madoff's investigation. And it will probe whether Madoff's stature or reputation had any impact on SEC decision-making.
He noted that there are many questions that have been raised already -- of the tiny accounting firm overseeing Madoff's fund, of the warning signs by key analysts nearly a decade ago, of how his returns were unusually consistent, among others -- will be examined closely.
The investigation, said Kotz, will not only look at what went wrong with Madoff, but will likely take a broader view and provide "overarching and comprehensive recommendations" to the SEC. Among the areas he said his office may look into: the complaint handling procedures of the enforcement divisions, the intra-agency communication as well as the Office of Compliance Inspections and Examinations.
"There needs to be more than just the potential identification of individuals who may have engaged in appropriate behavior or potentially failed to follow-up appropriately on complaints," he said. "But rather an attempt to provide the commission with concrete and specific recommendations as appropriate to ensure that the SEC has sufficient systems and resources to enable it to respond appropriately and effectively to complaints."
And that is exactly what many members are hoping for. "Our focus is not so much to blame for what happened," said Rep. Barney Frank (D-Mass.). "Our main job is to do what we can to see that this doesn't happen again."
Madoff made headlines last month when an unsealed criminal complaint in federal court in New York charged that he has been running a decades long Ponzi scheme that defrauded investors of $50 billion dollars.
A former chairman of NASDAQ, Madoff was an investment advisor who catered to a handful of high net worth clients, one of whom told ABC News that Madoff was so sought after that, as recently as two months ago, he was turning down potential new business. His handful of clients routinely expected -- and received -- double digit returns, up market or down.
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