The Inspector General's report reads like a roadmap of jaw-dropping incompetence. During five inquiries between 1992 and 2008:
• SEC enforcement staff "almost immediately caught Madoff in lies and misrepresentations, but failed to follow up on inconsistencies."
• "Even when Madoff's answers were seemingly implausible, the SEC examiners accepted them at face value."
• Despite receiving six "substantive complaints that raised significant red flags" like those expressed by securities expert Harry Markopolos as far back as 1999, who said it took him "five minutes to figure out he was a fraud," a "thorough and competent investigation or examination was never performed."
The report also found Madoff intimidated SEC attorneys, dropped names of higher ups in the agency, and went so far as to claim he was on the short list to be the head of the SEC, reports CBS News chief investigative correspondent Armen Keteyian.
To top it off, the agency's efforts were so uncoordinated, staffers didn't know there were two simultaneous inquiries being conducted in different cities. How did they find out? Madoff himself told them.
"When a federal agency's left hand does not know what the right hand is doing, and it has a mission, which is investor protection, it really calls into question whether the agency is up to the task," said Jacob Frenkel, a former SEC enforcement attorney.
Wednesday the new SEC Chairman Mary Schapiro said the fraud was a "failure that we continue to regret, and one that has led us to reform in many ways how we regulate markets and protect investors."
Madoff told the Inspector General that, at one point back in 2006, he thought he was a phone call away from being caught.
He said he was "astonished" that the SEC did not catch on.
Read more coverage of Bernard Madoff on CBSNews.com:
Watchdog: SEC Screwed up on Madoff
Madoff Sons May Pay for His Sins
Madoff Beach House Shown Off for Sale
Madoff's Beach House
Prison Denies Madoff Cancer Report
Author Claims 20-Year Affair with Madoff