Corzine’s “Dereliction Of Duty” Responsible For MF Global’s Bankruptcy

A New House Report Accuses Obama Bundler Jon Corzine Of Making “Fateful Decisions” Which Resulted In MF Global’s Bankruptcy

The House Financial Services Committee Report Offers A “Withering Critique” Of Corzine’s Tenure At MF Global. “In excerpts from a broader MF Global report to be released on Thursday, Republican members of a Congressional panel outlined a withering critique of Mr. Corzine’s 19-month tenure at the firm. The former Democratic senator and governor from New Jersey resigned as MF Global’s chief executive last fall after the firm raided customer accounts during a futile fight for its life.” (Ben Protess, “Congressional Report Blames Corzine For MF Global’s Collapse,” The New York Times’ DealBook, 11/14/12)

While At MF Global, Corzine “Made Several Fateful Decisions, The Cumulative Effects Of Which Caused MF Global’s Bankruptcy And Jeopardized Customer Funds.” “During his nineteen-month tenure as Chairman and CEO of MF Global, Jon Corzine made several fateful decisions, the cumulative effects of which caused MF Global’s bankruptcy and jeopardized customer funds.” (“The Collapse Of MF Global,” House Financial Services Committee, 11/15/12)

Corzine’s Failure At MF Global Represents A “Dereliction Of His Duty.” “However, the responsibility for failing to maintain the systems and controls necessary to protect customer funds rests with Corzine.  This failure represented a dereliction of his duty as MF Global’s Chairman and CEO.” (“The Collapse Of MF Global,” House Financial Services Committee, 11/15/12)

As CEO Of MF Global, “Corzine Missed Warning Signs About MF Global’s Weak Liquidity Position And He Torpedoed An Overhaul Of The Firm’s Risk Controls.” “In a series of potential missteps, the report said, Mr. Corzine missed warning signs about MF Global’s weak liquidity position and he torpedoed an overhaul of the firm’s risk controls. Citing “a dereliction of his duty,” the report claims that the moves arguably left customers vulnerable to the invasion of their accounts.” (Ben Protess, “Congressional Report Blames Corzine For MF Global’s Collapse,” The New York Times’ DealBook, 11/14/12)

 

Obama Called Corzine His “Wall Street Guy”

Obama: Corzine Is “Our Wall Street Guy.” “The rollout also provided a showcase for Corzine, the former Goldman Sachs CEO whom Obama referred to as ‘our Wall Street guy’ at a meeting of Democratic governors in Chicago on Friday.” (Claire Heininger, “Corzine Profile Rises In Obama Camp,” The Star-Ledger (NJ),6/23/08)

Corzine Bundled Over $500,000 For Obama’s Reelection Campaign. (Center For Responsive Politics, Open Secrets, Accessed 11/15/12)

·        The Obama Campaign Has Not Returned The Bundled Money. “Corzine was one of 41 donors who bundled more than $500,000 this year for Obama’s re-election effort, according to documents released by the campaign Oct. 14. The campaign doesn’t plan to return those bundled donations and will evaluate other contributions from MF Global employees on a case-by-case basis, according to the Democratic official.” (Hans Nichols, “Obama Returns $70,000 In Corzine Donations,” Bloomberg, 12/23/11)

Obama Was “Proud To Stand” With Corzine Who He Called A “Leader…Called To Govern In Some Extraordinary Times.” “I’m proud to stand with a man who wakes up every single day thinking about your future and the future of this state — and that’s your governor, Jon Corzine. Like many of us in public life today, Jon is a leader who’s been called to govern in some extraordinary times. He’s been tested by the worst recession in half a century a recession that was caused by years of recklessness and irresponsibility and a do-nothing attitude.” (President Obama, Remarks By The President At New Jersey Rally For Governor Jon Corzine, Holmdel, NJ, 7/16/09)

Obama: Corzine “Was An Ally With The Obama Administration In Helping Us Develop A National Recovery Plan.” “Jon Corzine wasn’t just the first governor to pass an economic recovery plan for his state; he was an ally with the Obama administration in helping us develop a national recovery plan.” (President Obama, Remarks By The President At New Jersey Rally For Governor Jon Corzine, Holmdel, NJ, 7/16/09)

Corzine’s Risky Bet

Obama’s “Wall Street Guy” Lobbied Regulators For Rules That Pleased Him, Leaving MF Global Customers To Face The Consequences

OBAMA LAUDED JON CORZINE AS HIS “WALL STREET GUY” WHO HELPED CRAFT THE STIMULUS

Obama: Corzine Is “Our Wall Street Guy.” “The rollout also provided a showcase for Corzine, the former Goldman Sachs CEO whom Obama referred to as ‘our Wall Street guy’ at a meeting of Democratic governors in Chicago on Friday.” (Claire Heininger, “Corzine Profile Rises In Obama Camp,” The Star-Ledger (NJ),6/23/08)

Obama: Corzine “Was An Ally With The Obama Administration In Helping Us Develop A National Recovery Plan.” OBAMA: “Jon Corzine wasn’t just the first governor to pass an economic recovery plan for his state; he was an ally with the Obama administration in helping us develop a national recovery plan.” (President Obama, Remarks By The President At New Jersey Rally For Governor Jon Corzine, Holmdel, NJ, 7/16/09)

Vice President Biden: “Jon Corzine Helped Craft The Recovery Act.”BIDEN: “It’s not coincidental that that’s what the Recovery Act is. Jon Corzine helped craft the Recovery Act. It’s not coincidental that the things he did here turned out to be the exact same things the recovery act has because way back in the transition period before we were sworn in, when Barack Obama and I were literally sitting at a desk in a high rise in Chicago beginning to plan how we would try to get this economy out of a ditch, literally the first guy I called was Jon Corzine. Not a joke. Not a joke. Because first of all, he’s the smartest guy I know in terms of the economy and on finance.” (Vice President Joe Biden, Remarks, NJ, 5/7/11)

In The Early Days Of The Obama Administration, Biden “Literally” Called Jon Corzine For Advice On The Economy Because “He Knew About The Economy … And We Trusted His Judgment.” “‘I literally picked up the phone and called Jon Corzine and said Jon, what do you think we should do,’ Biden said. ‘The reason we called Jon is that we knew that he knew about the economy, about world markets, how we had to respond, unlike almost anyone we knew. It was because he had been in the pit — because he had been in the furnace. And we trusted his judgment.’” (Conor Friedersdorf, “Obama’s Team Relied On Jon Corzine For Economic Advice,” The Atlantic, 11/14/11)

Corzine Was The Obama Campaign’s Wall Street Liaison

Corzine Played A “Central Role” In Obama’s Wall Street Fundraising Efforts. “His new legal troubles, sparked by the bankruptcy filing of his investment firm, MF Global, could complicate the president’s efforts to raise money from the financial community given Corzine’s central role in those efforts.” (Michael Isikoff, “Corzine, Top Obama Fundraiser, Under FBI Investigation,” MSNBC, 11/2/11)

Corzine Bundled Over $500,000 For Obama’s Reelection Campaign. (Center For Responsive Politics, Open Secrets, Accessed 5/22/12)

  • The Obama Campaign Has Not Returned The Bundled Money. “Corzine was one of 41 donors who bundled more than $500,000 this year for Obama’s re-election effort, according to documents released by the campaign Oct. 14. The campaign doesn’t plan to return those bundled donations and will evaluate other contributions from MF Global employees on a case-by-case basis, according to the Democratic official.” (Hans Nichols, “Obama Returns $70,000 In Corzine Donations,” Bloomberg, 12/23/11)

 CORZINE PERSONALLY LOBBIED REGULATORS SO HE COULD CONTINUE HIS RISKY BETS AT MF GLOBAL

Click To Watch

While At MF Global, Corzine Borrowed Money From Other Accounts To Fund Firm Trading, A Practice Known As “Internal Repo.” “At MF Global, his strategy was simple: ‘We are transforming from sort of an old-like brokerage firm into an investment bank’ Corzine told CNBC’s Maria Bartiromo. Key to his plan was a massive bet on European government bonds – a bet that would swell to more than $6 billion, and ultimately lead to MF Global’s collapse. Corzine’s bet could not have occurred without a finance strategy known as ‘internal repo.’ In essence, MF Global was borrowing money from customer accounts and using it to fund trading in another part of the firm. During the summer of 2011, however, just months before MF Global filed for bankruptcy, internal repo was a strategy regulators were hoping to do away with.” (Jason Breslow, “How Corzine Steered Regulators To Protect Fatal MF Global Bet,” PBS, 5/22/12)

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Corzine Missing Money “Vaporized”

More bad news for those who lost their money in MF Global’s bankruptcy just days before the House Financial Services Committee conducts another hearing.

It Is Unlikely The $1.2 Billion Missing From MF Global Customers Will Ever Be Recovered. “Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.” (Scott Patterson And Aaron Lucchetti, “Money From MF Global Feared Gone,” The Wall Street Journal , 1/30/12)

  • "The Findings So Far Suggest That A ‘Significant Amount’ Of The Money Could Have ‘Vaporized.’" “As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a ‘significant amount’ of the money could have ‘vaporized’ as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.” (Scott Patterson And Aaron Lucchetti, “Money From MF Global Feared Gone,” The Wall Street Journal , 1/30/12)

Which Means Either MF Global Had “Extremely Poor Accounting Controls” Or “Unlawfully Appropriated” The Money. “He said that leaves two possibilities: Either MF Global had ‘extremely poor accounting controls’ and is unable to track down the money, or the funds were unlawfully appropriated.” (James O’Toole, “The MF Global Money Chase,” CNN Money, 12/6/11)

  • “In The Latter Scenario, Staff From MF Global Could Potentially Face Criminal Charges, And The FBI Is Now Investigating The Case.” (James O’Toole, “The MF Global Money Chase,” CNN Money , 12/6/11)

Lawmakers Are Pushing For Answers From Jon Corzine, Former MF Global Chairman. “Lawmakers have pushed for answers from Jon S. Corzine, the former New Jersey governor and Goldman Sachs Group Inc. chairman who led MF Global into its big European bet and was CEO when the company failed. On Thursday, a House Financial Services subcommittee will zero in on the securities firm’s risk-management practices and the role of credit-rating firms in the collapse. Among the people scheduled to testify at the hearing is Michael Roseman, a former chief risk officer at MF Global who raised serious concerns several times in 2010 about the growing bet on European bonds by Mr. Corzine.” (Scott Patterson and Aaron Lucchetti, “Money From MF global Feared Gone,” The Wall Street Journal , 1/30/12)

  • President Obama: Corzine Is “Our Wall Street Guy.” “ The rollout also provided a showcase for Corzine, the former Goldman Sachs CEO whom Obama referred to as ‘our Wall Street guy’ at a meeting of Democratic governors in Chicago on Friday.” (Claire Heininger, “Corzine Profile Rises In Obama Camp,” The Star-Ledger (NJ),6/23/08)
  • Obama: “Jon Corzine wasn’t just the first governor to pass an economic recovery plan for his state; he was an ally with the Obama administration in helping us develop a national recovery plan.” (President Barack Obama, ” Remarks By The President At New Jersey Rally For Governor Jon Corzine ,” Holmdel, NJ, 7/16/09)
  • Watch Obama’s Comments Here
  • In The Early Days Of The Obama Administration, Biden “Literally” Called Jon Corzine For Advice On The Economy Because “He Knew About The Economy … And We Trusted His Judgment.” “‘I literally picked up the phone and called Jon Corzine and said Jon, what do you think we should do,’ Biden said. ‘The reason we called Jon is that we knew that he knew about the economy, about world markets, how we had to respond, unlike almost anyone we knew. It was because he had been in the pit — because he had been in the furnace. And we trusted his judgment.’” (Conor Friedersdorf, “Obama’s Team Relied On Jon Corzine For Economic Advice,” The Atlantic , 11/14/11)

  • Corzine Played A “Central Role” In Obama’s Wall Street Fundraising Efforts. “His new legal troubles, sparked by the bankruptcy filing of his investment firm, MF Global, could complicate the president’s efforts to raise money from the financial community given Corzine’s central role in those efforts.” (Michael Isikoff, “Corzine, Top Obama Fundraiser, Under FBI Investigation,” MSNBC , 11/2/11)
  • Jon Corzine Has Bundled Over $500,000 For Obama’s Reelection Campaign. (Center For Responsive Politics, Opensecrets.Org, Accessed 10/31/11)