Political & Elections

speaking of Solyndra, the White House is not going to turn over the documents that were subpoenaed

just finished reading, Crash of the Titans, Greg Farrell, 2010. Bout the fall of Merrill Lynch in its last year of existence and its absorption by Bank of America-possibly problem in the future because of its own mortgage originations in the mid '00's, trading in its (BOA) own accounts, take over of ML and Countrywide.

"Others Pay Price for Corzine’s Risky Revenge: Cohan
By William D. Cohan Nov 1, 2011 7:00 PM ET 71 Comments Q.


In the end, Jon Corzine was little more than an unsupervised rogue trader.

His disproportionately reckless $6.3 billion bet on the credit quality of a few European nations bankrupted MF Global Holdings Ltd. (MF) over the course of three dramatic days after the short-term credit markets quickly lost confidence in him and his firm. His gamble will cost MF’s shareholders and creditors billions of dollars and, virtually overnight, put the careers of MF’s almost 3,000 employees in jeopardy.

MF Global now has the distinction of being one of the largest bankruptcies in American corporate history, with almost $40 billion in liabilities. There is also the matter of the hundreds of millions of dollars of customers’ money that regulators have reported to be missing from the firm’s coffers.

In any case, it’s incredible how little Corzine and his associates learned from the collapses of Bear Stearns Cos., Merrill Lynch, Lehman Brothers Holdings Inc. and American International Group Inc. three years ago. And it now seems very hard to believe that just a few months ago Corzine was considered the front-runner to be the next U.S. Treasury secretary.

It didn’t have to be this way. The tragic element of Corzine’s MF Global is that Monday’s bankruptcy filing could have easily been avoided if Corzine’s ego and ambition had been held in check by someone -- anyone -- willing to stand up to the former New Jersey governor, senator and senior partner at Goldman Sachs Group Inc. (GS)

No One Watching
Where, for example, was J. Christopher Flowers, the billionaire founder of J.C. Flowers & Co.? According to MF Global’s most recent proxy statement, Flowers’s firm owned 6.8 percent of MF. But then Flowers had reasons to have blind faith in Corzine: It was Flowers who recruited the former governor to MF in 2010, and also made Corzine a partner in his private- equity fund. When the two men were at Goldman Sachs in the 1990s, they had a symbiotic relationship: As Flowers was head of the financial-institutions group, Corzine relied on him to make introductions to other Wall Street bosses so they could ponder strategic deals.

Where were MF Global’s other institutional shareholders, such as Fidelity Investments (which held a 14.8 percent stake, according to the proxy), Guardian Life Insurance Co. (7.4 percent), TIAA-CREF Investment Management LLC (6.6 percent) and Piper Jaffray Cos. (PJC) (6.3 percent)? Were they too dazzled by Corzine’s resume to take a serious look at how he intended to transform MF Global from a backwater to a major player on Wall Street? Where was MF Global’s auditor, PriceWaterhouseCoopers LLP, which managed to pocket almost $25 million in fees from the company over the past two years?

And where, for heaven’s sake, was MF Global’s eight-member board of directors -- a ragtag collection of mostly unknown Wall Street types who had the fiduciary responsibility on behalf of creditors, shareholders, counterparties and employees to make sure Corzine wasn’t taking irresponsible risks? Is it too much to ask a board of directors to take this responsibility seriously? Apparently it was at MF Global.

In granting Corzine a three-year extension of his employment agreement in 2011, the board’s compensation committee noted that his “performance has been exemplary since joining the firm just over one year ago,” according to the proxy statement. The board also noted that Corzine “accomplished key near-term building blocks, including significant improvements in the reputation of the firm as demonstrated by its ability to hire quality professionals, the company’s success in securing primary dealer status, its growing client balances and its improved posture with regulators.” One wonders if the board members still hold that opinion.

Other People’s Money
The collapse of MF Global points once again, in the strongest possible terms, to the importance of having a substantive, teeth-bearing regulatory regime charged with overseeing the kind of asynchronous risk-taking that gives people like Corzine the incentive to gamble with other people’s money in hopes of reaping financial windfalls. And yet, more than three years after the collapse of Lehman Brothers and the onset of the financial crisis, we don’t have in place anything close to necessary regulations to try to prevent companies like MF Global from exploding.

There is little question that from the outset of his tenure at MF Global, Corzine was swinging for the fences. He told me at the time that he saw MF Global as sleepy and risk-averse; he was determined to ratchet up exponentially the amount of risk the firm took using its creditors and shareholder money. Corzine himself had only a tiny fraction of his fortune invested in MF Global. His option-oriented compensation package encouraged him to take outsize risks in order to move MF Global’s stock price into “in-the-money” territory.

One also suspects that Corzine was looking for some serious redemption after the January 1999 coup he suffered at the hands of his fellow Goldman Sachs partners. Even though Corzine hadn’t sat on a trading desk in years, MF Global was his return ticket to the land of the Wall Street giants.

Corzine has always been a bit precocious and underestimated. In 1980, at the age of 33, he became a Goldman Sachs partner after just 4½ years at the firm. In 1986, he turned a wrong-way bet by Goldman Sachs on the direction of interest rates and Treasury securities -- a bet that looked like it was going to cost the firm $150 million -- into a $10 million gain after he personally took charge of the trade and worked it out. Many of his Goldman Sachs partners saw him as a bit of a hero afterwards, and the slope of his career trajectory angled dramatically upward.

In 1993, his future leadership of the firm was virtually assured after his trading group racked up impressive gains on the direction of various currencies against the dollar, helping Goldman Sachs to achieve record pretax earnings of $2.7 billion.

A Golden Boy
Corzine was the firm’s golden boy. But just after those earnings were paid out as partner bonuses, the trading environment in 1994 turned decidedly sour. In that year, the firm started losing almost $150 million every month and Corzine refused to give up on his trades --another wrong-headed bet on interest rates. In the end, the firm barely broke even in 1994, and some 40 partners left the company as they watched their capital accounts dwindle. Somehow, Corzine wasn’t held accountable.

In September 1994, despite the huge trading losses for which his fixed-income group was responsible, Corzine’s partners selected him to be the firm’s new senior partner. In 1995, the year after the worst annual performance in Goldman Sachs’s history, he exhorted his partners to try to make $10 billion in pretax income during the next five years. After first snickering at this goal, his partners accomplished it -- and more -- making the firm’s May 1999 initial public offering both inevitable and a huge success. By then, though, Corzine’s unilateral efforts to merge Goldman Sachs with a variety of other Wall Street titans - - from Salomon Brothers to JPMorgan to Mellon Bank -- had so alienated his partners that they colluded to oust him. He said he never saw it coming.

While the denouement of MF Global is still being written, one thing is crystalline: Behind Jon Corzine’s bearded, avuncular facade lies the soul of a stubborn, ambitious and aggressive risk-taking trader who in the end drove MF Global into the financial abyss. If only someone had had the guts to stop him.

Actually, poet wants Herman Cain, Michele Bachman, Rick Perry, Mit Romney, Newt Gingrich, Ron Paul, or Rick Santorum to win the nom. None of them could beat Obama at this point, save the GOP comes up with some knock-out scandal to level against him (which I'm sure operatives are even now working round the clock to dig up---or manufacture). The one logical and moderate candidate that lots of independents could get excited about, perrennially hovers at around 2 percent, but as Jazzy has already pointed out, this smart, thoughtful, experienced and capable two term Governor is not extreme enough to excite the red meat loving base of the GOP. More's the pity. Even I'd listen to this guy.

Hmm... if I was saddled with Jimmy Carter redux as my nominee, and was cursed with being politically aware enough to care, I'd probably look for comfort in just about any cup of drying leaves that had been left around.

Poet wants Herman, jazzy wants anyone with the taint of the Tea Party, and cartera isn't really saying as to what she wishes would make O look electable. Again. To finish the job, stay the course, bring about that change that we're still waiting for, three years in.

Corzine and the like just seem such the lie to that whole grassroots thing Obama projected back when he was running on those nickle and dime donations, the ones his campaign was so proud of talking about. Granted it was about the time he refused to go the public financing route, but it damned near brought a tear to my eye all the same.

Whatever, Cat....But, I do know there's no way for one man to build a bridge while a man on the opposite side stands by with dynomite at the ready.

I'm ashamed to admit that about the only thing I really know about the Citizens United case, poet, is that it coaxed a sour and peevish little display from a man that got elected claiming to be a bridge builder.

Corzine probably has a few good years left in him, cartera. Nothing strenous, though: maybe a stint on the Buddist temple circuit?

Thank goodness they got those donations in before all the money was gone. We will use it wisely.

They thought so highly of Corzine that they added him to the team?

Somebody - someones, really - thought he'd be an essential addition to a team that's performed so well:

But don't just think of Corzine as a bad governor who drove a multi-billion-dollar firm to bankruptcy. The Weekly Standard's Mark Hemingway reminded me on Twitter today of this lovely November 2008 essay on Corzine as Obama's prospective Treasury Secretary, in which The Nation's John Nichols called Corzine "change we can believe in." Note also the praise at the bottom from former SEIU boss Andy Stern:

Everyone is excited about the fact that President-elect Barack Obama is talking with New York Senator Hillary Clinton about the prospect that she might serve as Secretary of State. But the big news from inside the transition process is the speculation that New Jersey Governor Jon Corzine might be selected for the essential economic position of Secretary of the Treasury....

...Corzine is not your typical Goldman-Sachs man.

Seriously, Obama piggy-backing on the OWS movement is one of the more ludicrous things showing these days but who ever said liberals have to make sense, eh?

Razorsharp: Do you just go from 1 blog to another making this stuff up?