All of it made possible by his close ties to Democrats and the world of Goldman “Government” Sachs.
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Maybe (soon to be) poor Jonny C is just accident-prone. After all, a 2007 SUV accident (in which Corzine was a front-seat passenger) left him with multiple broken bones, in critical condition, and breathing through a tube. The state trooper driving the vehicle was going 91 MPH (presumably with Corzine’s consent) and Corzine was not wearing his seat belt. If that isn’t a perfect analogy for Jon Corzine’s professional career, I don’t know what is. And maybe he accidentally had a two-year affair with the president of one of New Jersey’s largest state employee unions, after which his ex-wife, Joanne, said that “Jon did let his family down, and he’ll probably let New Jersey down, too.”
Seriously, who would hire this guy?
The man who cost Goldman Sachs so much money that they had to delay their IPO, who aggressively put himself before his firm’s customers and tried to profit by their failure, who cheated on his wife, and who nearly bankrupted a state was an odd choice to run a brokerage firm—except for one thing: Corzine’s connections in a financial world that has at the highest levels of policy and regulation become something like an ex-Goldman mafia made the MF Global board of directors believe that Corzine could take them places nobody else could. Sadly, they were right.
THE MOST OBVIOUS TARGET for Jon “It’s who I know, not what I do” Corzine was Gary Gensler. Mr. Gensler was appointed by Barack Obama in 2009 to be chairman of the Commodity Futures Trading Commission, the agency with the responsibility to regulate commodities and futures markets, including brokerage firms like MF Global.
Corzine had been Gensler’s boss at Goldman and the two were long-time personal friends. Gensler is a major donor to Democratic Party organizations and candidates, giving more than $230,000 in the past decade to about thirty individual candidates and more than a dozen states’ Democratic Party committees.
Chairman Gensler knows that his connections with Corzine are a problem and has recused himself from the CFTC’s investigation into MF Global’s collapse. Senate Republicans such as Pat Roberts (KS) have pointed out that Gensler’s “actions on this matter as of late certainly don’t look good.”
In 2010, following passage of the Dodd-Frank Financial Reform bill, the CFTC proposed a change to its Rule 1.25 that would have prohibited the investment of “customer segregated funds” by MF Global and similar firms in foreign nations’ sovereign debt. The New York Times reported that “Mr. Corzine and other members of the firm met with the commission in July to discuss the proposed changes.” Would anyone like to guess how much additional weight MF’s position was given due to Mr. Corzine’s connection to Gensler and other high-power officials?
So, almost a year before MF Global’s foreign debt-caused failure, the CFTC had proposed eliminating foreign sovereign debt as an option for MF and similar firms’ portfolios because there is “too much volatility to allow this to continue as an eligible investment.” But with Corzine’s opposition (as well as that of other firms), the reform effort was stillborn. Throttling this sort of reform was, perhaps to their eternal regret, exactly what the MF Global board of directors hoped Corzine would be able to accomplish when they hired him.
In a perfect example of government’s latest “epic fail” in regulating financial markets, on December 4, the CFTC unanimously approved the very change to Rule 1.25 that Jon Corzine stopped in its tracks on his way to destroying his company.
One has to wonder what the purpose of the CFTC is if a $200 million agency budget and more than 500 employees doesn’t let them catch a firm that appears to have misappropriated, and perhaps lost, more than a billion dollars of customer funds. Apparently it doesn’t even let them change a rule they know desperately needs changing. Considering the SEC’s not catching Bernie Madoff or Tom Petters, recent hand-wringing about people losing faith in markets should instead focus on incompetent or (intentionally?) ineffective regulators.
It’s not just that firms will always be one step ahead of regulators. It’s also that many employees of the regulatory agencies hope one day to get a high-paying job in one of the firms they are paid to monitor. The incentives are simply too perverse to expect any outcome other than exactly what we’re seeing now.
Those in charge of high-level federal appointments and hires should aim for, if you will pardon the use of one of the left’s favorite terms, more diversity of background in senior Treasury and financial regulatory agency positions.
ANOTHER FRIEND OF Corzine’s from his Goldman Sachs days is William Dudley (whose political contributions have been small, but, like Corzine and Gensler, also given to Democrats). Dudley is the president and CEO of the Federal Reserve Bank of New York—the most important and powerful bank in our Federal Reserve System—where he succeeded Tim “TurboTax” Geithner.
In February 2011, the New York Fed gave MF Global status as a “Primary Dealer,” putting it into an elite club whose members “serve as trading counterparties of the New York Fed in its implementation of monetary policy” through a range of responsibilities and privileges.
Being a Primary is a big deal; as of today, only 21 firms hold that status, and a quick scan shows a list of some of the biggest names in finance, including Merrill Lynch, Goldman Sachs, JP Morgan, and Morgan Stanley. Indeed, the very large sizes of the firms on the list (with the exception of Jeffries & Company) raises the question of why MF Global would have been given such a coveted status usually reserved for the financial “A-Team,” not a second-tier—even if fairly large—commodity and futures brokerage firm.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?
H/T to National Review Online