Bernard Madoff spent three hours chatting with an SEC enforcement honcho this week at the New York Metropolitan Correctional Center, where he is awaits sentencing. SEC Inspector-General David Kotz is investigating what federal securities regulators knew and didn't know about Madoff's long-running scheme.

It's unclear what the two chatted about specifically, but my guess is that Madoff made clear just how easy it was for a knowledgeable executive to fool so many people for so many years. Kotz told CNNMoney, which broke the story, that he's been "making substantial progress in the investigation" and plans to issue a report shortly. It will not likely be a pat on the back for federal regulators. In fact, it might be pretty damning.

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