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9:00 AM EST, Thursday, February 5, 2009. The cash saga. You have cash. Cash is King. But you're not "putting it to work."

Shame on you.

If you do put it to work, you'll do something stupid.

Trust me.

But you can't leave it sitting around in cash. Ah ha, the basic conundrum.

So, stick it in FDIC-insured bank certificates of deposit (CDs). I went shopping yesterday for CDs. It was my second attempt at giving boredom a whole new meaning. (It succeeded.) I learned:

1. Bank CDs are all over the place. For a one-year CD, you can get 1% to 3.25%. These rates are much higher than your broker's money market fund is paying you. They're also safer, since they're FDIC-insured. (I am not getting into the obvious next discussion -- Is our Federal Government safe?)

2. The longer the CD, the lower the interest rate. That's called an inverted yield curve. It has something to do with the fact that our government is now "managing" our banking system. Enough said.

3. You may be able to bargain a few extra basis points out of your local bank, if you beg. Tell them of other banks' rates. See below.

4. Interest rates have fallen. I got 8% from my "brilliant" bank deposit in Australia but as of January 31, the rate dropped to 4.2%. (I say "brilliant" because the Australian dollar promptly fell 30% after I sent money there.)

There is some thought that interest rates will rise in coming months. Which is why Todd is telling me not to buy New York muni bonds now. I found some paying 4.23% tax-free -- the equivalent of 7% pre-tax -- yesterday. But Todd thinks we'll be able to get over 5% -- perhaps 5.5% -- in coming months. There is a huge spread between what muni bonds are paying and what treasurys are paying. But different influences (like offerings, availability, fashion, etc.) affect treasurys and munis. They don't move in synch. Gotta be patient and ready to pounce.

5. You find CDs in the obvious places. Stick "bank CDs" into Google and you'll turn up two key places -- Money-rates and Bankrate. Etrade also sells them. There's also Zionsdirect which I don't fully trust. Normally the Internet works best. But not in this case. The best place to find your CD is by looking for new banks in your local town. Here's a little chart from my researches yesterday:

I ended up putting some money into Park Avenue Bank and Savoy Bank. Savoy is a new bank. It started a couple of years ago with $20 million in equity and now has around $68 million in total assets. That's with one branch and a bunch of very enthusiastic worker-bees, who all seem to own shares in the place. Their success reiterates what I've been saying for eons -- Now is the time to start a local bank. Get your friends together, throw in some money and go for it. You have one great marketing pitch: "Heh, guys we weren't around for sub-prime shenanigans. We're new, clean and enthusiastic." For more on Savoy Bank.

Harry Markopolos before Congress. He tried to warn the SEC about the Madoff fraud. But the SEC didn't listen. Meantime, he feared for his life, since he believed that Madoff was laundering money for the Russian mob and some of the South American drug cartels. He appeared before Congress yesterday. It was engrossing testimony. He ripped into the SEC's gross incompetence. He had facts, stories and serious research. He had suggestions for how to fix regulation -- one giant regulatory agency, with a coordinated database, and no cracks which crooks like Madoff could (and did) slide between. Reuters UK reported his appearance thus:

WASHINGTON (Reuters) - Harry Markopolos, a former investment manager who tried to warn U.S. regulators about Bernard Madoff, joined lawmakers in blasting the Securities and Exchange Commission but said he was forwarding more tips to the agency.

Markopolos told a congressional hearing on Wednesday that SEC staff were neither willing nor able to uncover what Madoff, arrested in December and charged with a record-shattering $50-billion fraud, was really doing.

Calling SEC staff "too slow, too young and too undereducated," Markopolos said the regulator was hindered by lawyers, did not understand red flags, could not do the math and was captive to the financial industry.

"They looked at the size of Madoff and said he's a big firm and we don't attack big firms," said Markopolos, who became aware of Madoff when the firm he worked for tried to pursue the same kind of strategy Madoff did but never got the same steady, strong returns.

Members of the House Financial Services subcommittee hailed Markopolos but excoriated five SEC officials who declined to answer specific questions about the Madoff case, citing ongoing investigations.

"You couldn't find your backside with two hands if the lights were on... You have totally and thoroughly failed in your mission," said New York Democratic Rep. Gary Ackerman,

Markopolos said he knows the names of a dozen so-called feeder funds that helped Madoff raise money from pension funds and wealthy investors and that he would turn these over to regulators this week.

Markopolos, now a fraud investigator, said Madoff could not have acted alone, citing accountants and people helping convey money to his scheme. Madoff was arrested after his sons went to authorities saying their father had confessed to them.

Madoff, a former chairman of the Nasdaq stock market, has been accused of running a massive Ponzi scheme in which he paid off earlier investors with money from later investors.

Asked if there were other Madoffs waiting to be discovered, Markopolos said he was forwarding information to the SEC about a Ponzi scheme of around $1 billion.

For the SEC, Wednesday's testimony marked what some insiders called the worst day in the agency's history, further tarnishing its reputation and sending morale to a new low.

Lawmakers angrily questioned the SEC's head of enforcement, Linda Chatman Thomsen; the agency's top examiner Lori Richards; Erik Sirri, the SEC's trading and markets chief; Andrew Donohue, who is in charge of investment management and the SEC's acting general counsel, Andrew Vollmer.

Capital markets subcommittee chairman, Paul Kanjorski, a Democrat from Pennsylvania, threatened to reform the SEC out of existence.

And Ackerman, who personally escorted Markopolos out of the hearing room, told the SEC officials: "We thought the enemy was Mr. Madoff, I think it was you. You were the shield,"

Markopolos described his failed efforts to get regulators to probe Madoff from 2000 on. "I gift-wrapped and delivered the largest Ponzi scheme to them," he told the lawmakers.

Markopolos became suspicious of Madoff's ways in 1996 after he and a friend pored over mathematical models that might recreate Madoff's returns only to determine that there was no way Madoff could consistently outperform the markets.

Harsh words were lobbed at former SEC employees including Meaghan Cheung, the agency's New York branch chief whom Markopolos contacted in 2005. Cheung, Markopolos said, was arrogant, never grasped the concepts in his report or asked him any questions. Cheung left the SEC in fall of 2008.

The SEC division heads told the panel that the agency was considering a number of changes in light of the Madoff case, including how frequently investment advisers are examined.

Thomsen, who appeared visibly shaken during the hearing, responded to charges that her enforcement division had too many lawyers. "Within enforcement we have lots of accountants, lots of market specialists and investigators."

Republican Rep. Spencer Bachus, of Alabama, was the only lawmaker who praised the agency. "We don't mean to convey that there hasn't been good work by the SEC," he said at the end of the hearing.

Kanjorski said he was going to introduce legislation that would give the Public Company Accounting Oversight Board, the authority to examine the auditors of broker-dealers.

Madoff's auditor was a small, unknown firm that was not registered with the PCAOB.

Shoot the Dog, part 2. Remember yesterday's piece that 30%+ of all homeowners insurance liability claims in 2007 were dog injury related? And The average cost of a claim in 2007 was an astounding $24,511. Reader, Fred Boness writes,

A few years ago Milwaukee man was a defendant over a dog bite injury. His dog was a German shepherd named Satan.

From this I learned name your dog Fluffy.

Three Girl Friends Meet for Lunch. The other day I had lunch with 2 of my unmarried friends. One is engaged, one is a mistress, and of course I have been married for 20+ years.

We were chatting about our relationships and decided to amaze our men by wearing a black leather bra and bodice, stiletto heels and a mask over just our eyes. We agreed to meet in a few days to exchange notes. Here's how it all went:

My engaged friend: The other night my boyfriend came over and found me wearing a black leather bodice, tall stilettos and a mask. He saw me and said, 'You are the woman of my dreams. I love you.' Then we made love all night long.

The mistress: Me too! The other night I met my lover at his office and I was wearing the leather bodice, heels and mask over my eyes and a raincoat. When I opened the raincoat he didn't say a word, but we had wild sex all night.

Then I had to share my story: When my husband came home I was wearing the leather bodice, black stockings, stilettos and a mask over my eyes. As soon as he came in the door and saw me he said.

"What's for dinner, Batman?"

The Texas job interview.
A man seeking to join a south Texas Sheriff's Department is being interviewed.

The Sergeant doing the interview says: "Your qualifications all look good, but there is an attitude suitability test that you must take before you can be accepted."

Then, sliding a service pistol across the desk, he says: "Take this pistol and go out and shoot six illegal aliens, six meth dealers, six Muslim extremists, six Australians and a rabbit."

"Why the rabbit?"

"Great attitude," says the Sergeant. "When can you start?"

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads on this site. Thus I cannot endorse, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Michael's business school tuition. Read more about Google AdSense, click here and here.