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The NY Times wonders why Corzine’s MF Global wasn’t checked

MF Global embezzled, I’m sorry, misallocated funds from its depositors to cover bets it made that Greece would be bailed out by the ECB and German and French taxpayers.  You’d think that the brokerage houses would have learned from 2008 and the NY Times editorial says that most of them have (I’ll believe that when I see it).  But somehow, Jon Corzine’s brokerage was allowed to operate in a highly leveraged condition.  The editorial board just can’t wrap its head around this:

Another reason that Mr. Corzine’s bets may have gone so wrong — and another echo of the financial crisis — is that American regulators did not rein in the firm. MF Global was highly leveraged, with liabilities at the end of June of $44.4 billion and equity of only $1.4 billion.

In a research note published on Tuesday, Steve Blitz, a senior economist with ITG Investment Research, pointed out that MF Global was one of the firms designated by the Federal Reserve as a primary dealer in United States Treasuries. After the havoc of high leverage in the financial crisis, how is it possible that the Fed allowed MF Global to operate with so much leverage? Are the Fed, the Securities and Exchange Commission and other relevant regulators fully monitoring the risks at other broker dealers?

Meanwhile, self-regulation is clearly not the answer. The Wall Street Journal reported on Monday that the Financial Industry Regulatory Authority, a self-regulatory agency for brokerages, recently warned MF Global to shore up its capital to cushion against its increasingly risky positions. Whatever the firm did, if anything, clearly wasn’t enough.

Are the authorities monitoring the risks?  Well, obviously, they weren’t monitoring this one.  How can that be?  What possible motivation could there be for averting one’s eyes from the MF Global’s collapse and unacceptable risk taking?  I mean, did they own Jon a favor or something?

Jeez, it’s like some kind of allegorical morality play.  “In this scene, Everyman is thwarted by the rich banker from Goldman-Sachs.  Which cardinal sins does he represent?  Anyone?  Bueller?”

Let’s not forget some of the delegate accounts from Denver where the Hillary delegates who tried to vote for her on the first ballot were cornered, screamed at, harassed in hotel lobbies, and threatened that they would lose their jobs if they didn’t change their votes before the roll call.  Here’s a few just to get a feel for how bad it was.  (I talked to some personally when I was in Denver and these accounts sound pretty accurate):

ARKANSAS: “I was so angry at the sham of a roll call that I just wanted it to be over… ” “the last time I felt such unbearable group pressure was on a jury”   ” Obama representatives yelling, you’ll be sorry” to “hold outs”.  It was brutal.”

An alternate kept calling out that the state voted 70% for Hillary yet recorded its 47 delegate votes for Obama – “how could that be?”

*

CALIFORNIA: Chris Stampolis reports “I cast my signed vote for Hillary this morning.  It will be added to the roll call count for California”.  Except, we may never know how California voted…

Delegate Ray Panko reports that, “The California vote was about 230+ for Obama to 160+ for Clinton which did not reflect the state vote.  The process was completely controlled by the DNC and the Obama campaign. They had us all vote at breakfast. They took our votes and tallied them. They did this to see how close the numbers would be between Obama and Clinton. The aim was to prevent the public from seeing the closeness of the race. California passed because the Obama/Dean,Nancy Church(DNC) told it to pass. It was a sham, show, farce, gimmick.

Overall, the process was reprehensible.  Each delegation was told a different story. No one was told the actual rules of the DNC which say delegates are required, in good conscience, to vote on the first ballot a vote that reflects the will of the voters who sent them to the convention. Gloria Allred was prevented from speaking to the California Hillary delegates to inform them of this rule and that it applies regardless of whether or not the candidate releases us or not.
http://www.youtube.com/watch?v…

People understood that pledged delegates would do what they came to Denver to do – vote for one of the nominees to reflect the votes of those who sent them.  We expected there to be respect for the 18 million votes and Hillary’s historic candidacy.  We even thought that Super Delegates would be allowed to do their job – to select the electable Democrat.   But that was not to be.  Instead, the roll call turned into one chaotic caucus rigged to be sure that the final vote would never be known, without any sublety or reverance for the sanctity of the vote or individual obligations.”

A Super Delegate reported that “CA “passed” without ever recording its votes because the Hillary delegation stood firm and had the vote been given accurately, Hillary would have been temporarily ahead in the roll call”.

Clinton delegate and LA attorney Gloria Allred grabbed a napkin from the tables at the California delegation breakfast and wore it as a gag to protest not being allowed to speak at the breakfast.  “I was not elected to be a potted plant,” Allred said through her gag, holding up DNC rules that say delegates must vote as they are elected. Californnia had 204 delegates pledged to Hillary Clinton, versus 166 for Obama.”

*

NEW HAMPSHIRE: “What thugs they are.  They make it clear that they really do not need us and have no intention of doing anything about the unity they mouth.”   “Our state voted strongly for Clinton but was threatened that funds would be withdrawn. The state cast its votes for Obama”.

NEW JERSEY:  “We overheard delegates from our state which had voted strongly for HRC saying that they understood DNC funding for local races in their state would be dependent on a unanimous delegation vote”.
A delegate was told “he needn’t worry about his vote – the totals for New Jersey were irrelevant, that the delegation was going to announce as unanimous”.

NEW YORK: “My guess, with no inside information at all, is that no-one expected her votes to melt away or be driven away – that the BOs would be gracious enough to let her have her votes and she would then nominate by acclamation.  That she did, but they had snarked away her delegates for maximum humiliation value”.

*

PENNSYLVANIA: An elderly weeping delegate who wanted to vote for Hillary was consoled by several fellow delegates who said they were all sent to Denver by their friends and neighbors to vote for Hillary but, “no-one seemed to care”.

OHIO: Flo Gurwin  After watching the convention proceedings in Denver, I certainly do believe in HIS change–his ability to continually change his mind.  I do not trust him.  I think he’s a snake and the scumbags surrounding him leave little doubt in my mind that he is not the sort of person I want for my president.”

*

TEXAS: Frances Morey: “I was less than enthusiastic about the impeachment of Bush AND Cheney because Pelosi would have been next in line for the Oval Office”. She also noted that “going into this convention Obama was flat-lining in the polls. If there is a bounce to follow we know who is responsible–The Clintons”.

“This morning I got my credential and was directed to go to another room. There I showed my badge and my id and indicated my presidential preference on a sheet next to my name and signed my name. This is the state tally sheet. Texas delegation officials, Boyd Richie’s staff and volunteers, have total control of this. They will use this tally sheet to report the Texas delegation totals for todays roll call vote at the Pepsi center later today.”

Blanche Darley, wearing a button saying ObamaNation Scares the Hell out of Me, on the impact of HRC’s speech: “We love her, but it’s our vote …we don’t trust or like him…”

Nata Koerber: “Hillary has a life-time of service to the Democratic Party and has done everything required and then some to encourage support of Obama. The responsibility of uniting the Party lies squarely in the lap of Barack Obama, and Joe Biden, Obama’s preferred choice for VP.”

A HRC pledged delegate, realizing that it did not matter how his delegation voted, announced that “it is obvious that the Obama campaign has no regard for the Clinton delegates or voters, that they were making it clear that Obama does not feel he has to treat us with even minimal respect.”

You can read more delegate accounts at Alegre’s Corner.

The bankers bought the superdelegates, the state parties, and Obama himself.  They own him.  He does their bidding.  And there was no one who symbolized that ownership more than Jon Corzine himself when he unanimously gave away the entire state of New Jersey’s delegates to Obama who lost the state by 10 points.  New York went right after we did and that put an end to the most rigged primary season and roll call vote in Democratic party history.

It’s no mystery why the Obama administration charged with oversight and regulation turned a blind eye to what Corzine’s fund was doing.  That’s the way the system was set up to work.

D’uh.

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28 Responses

  1. From your keyboard to G*d’s eyes. How much of the Obama shenanigans will be ammo for the republicans come next year?

    Unlike Pelosi, the republican controlled House won’t hesitate to impeach Obama should it look like he has a chance of winning in 2012.

  2. I doubt if there is anything that would please me more at this time in history than Corzine bringing down the Obama administration. Pay to play is their MO, it is Chicago politics after all. But I am not holding my breath. I have been disappointed so many times before.

    • Bringing Obama down? Obama’s doing that all by himself.
      My purpose is to keep bringing up what happened in 2008 until someone pays attention

    • One of the important aspects of the Chicago “pay to play” system is the ecumenical way both political parties ascribe to corruption. I had read that the philosophy those in “Chicago” believed in was that there was enough money for both parties to get. Hence we see bipartisan graft and corruption. (Transportation Sec…Ray LaHood of Chicago and Republican) Etc. Etc. Etc………

      • I’m not interested where it came from. It might have originated in Peoria or Waco or Paoli, PA. It doesn’t matter. There is no reason whatsoever why any of us should put up with this shit.
        The thing I keep coming back to that goes beyond Chicago is that the bad guys calculated that no one would care if they stomped all over the votes of what everyone perceived to be middle aged unfuckable women. It’s only a bunch of Roseanne Barrs. And that’s the thing that I find really ugly about the 2008 primaries. The guys in charge seem to have correctly figured out that the votes of one candidate’s supporters were worth less than another’s simply because of who they were perceived to be.
        I totally get the DNC and I can’t tell you how disgusted I am by that. It’s like reversing the right of women to vote.

    • I don’t see this bringing Obama down. Corzine will be thrown under the bus; fed to the wolves. The FBI has joined the investigation. OWS is a black swan event that requires a sacrificial Wall Street lamb to try to keep the protesting masses in check: Jon Corzine, you’re it. MF Global isn’t quite Goldman, but it will do for a start.

      • Joanie, I would be very surprised if this kind of betting on the sovereign debt was isolated to MF Global. Very surprised.
        The other thing we should remember is that Corzine was short listed just a few months ago to be Treasury Secretary. Yes, this guy was going to be Geithner’s replacement. He was hoping to cash in big by betting that Europe’s taxpayers were going to bail out Greece and Spain and Portugal. He was BETTING that he would reap the windfall of other people’s misery. THAT is who Obama was going to tap as his Treasury secretary. Even if no one else in the world cares, *I* care. The level of greed and insensitivity to cash in at other people’s expense should be outrageous to all of us.
        Then there is the fact that Corzine is one of Obama’s top fund raisers. He threw Obama one of the first fundraising dinners of the election season. Each seat cost $38,000. Just think, Obama was hoping to get money from the same people who were placing bets against the hard working people caught up in a sovereign debt crisis. That’s why we have so much economic inequality. That $38,000 came from somewhere. It came from the world’s 99%. We fork it over to them in some form, we take our punishment, make our sacrifices, live under austerity and jerks like Corzine take that money and spend it on the politician who will get them more of it.
        One other thing I’d like to point out. Obama’s campaign had the wherewithal to put the squeeze on many delegates and superdelegates during the convention. They threatened to withhold money from state and local campaigns all across the country. That right there is despicable enough though probably not new. But when it came time to lean on Democratic lawmakers like Lieberman and Stupak and Nelson over the past three years where was all that pressure and withholding of campaign funds? Absent.
        Obama is the worst of the worst. I didn’t think anyone could top Bush but he has. Awful doesn’t describe it. He will go down in history as a notoriously corrupt president. Mark my words.

        • ” I would be very surprised if this kind of betting on the sovereign debt was isolated to MF Global. Very surprised.”

          This is a good point and one I’ve been considering since the story broke.

          Where are the reporters? I haven’t read anything considering the possibility that this is a bigger story than just MF Global’s mismanagement. Are we sure Interactive Brokers hasn’t done the same thing?

          • Jeez, you should read the comments in the NYTimes article. It seems that everyone gets it except the NYTimes. They are highlighting (editor’s pick of comments) the comments that say basioally, “Poor Corzine, made some awful choices. But now he can’t be Treasury Secretary and surely, that’s punishment enough”
            I guess they’re friends of Corzine. It’s completely clueless.

          • No doubt there were others doing the same thing as MF Global. These guys are only too happy to feed from the bailout trough while referring to the ordinary worker as “lazy” and “entitled”.

            But the Greek prime minister just pulled another black swan out of his hat by calling for a referendum on the latest grand bargain. This “bargain” will undoubtedly be rejected by the voters leaving all those who were rubbing their hands at the prospect of more free money from taxpayers rubbing their heads instead. Many will be laid bare in much the same way as MF Global.

  3. Interview with Michael Lewis, author of:

    Boomerang: Travels in the New Third World’

    “The fact that they made their fortune from the collapse of civilization”

    The devil(s) in the details starts at the 15:00 minute mark:

    http://www.charlierose.com/view/interview/11924

  4. Sorry, actually in the link above, the interesting part about who figured out that “Betting on the Collapse” was the new game – starts closer to the 16:00 minute mark.

    Watching it from that point to the end – Lewis nails what “has happened to middle class Americans” and how, if ever, the ship will be righted.

    Basically, the one’s that were bailed out are now more wealthy than ever in history and they are using it to control and fight any type of reform on every level – more vigorously than ever.

    What a shock.

    http://www.charlierose.com/view/interview/11924

    Reply

    • Thanks for the link. I read Boomerang and found it light and entertaining, as books on disaster capitalism go. Lewis thinks the primary reason why Greece has a debt crisis is because nobody pays taxes there. Well, people who work for companies do but most people don’t. The tax collection system is weak. Do, before I imposed austerity on everyone else, I’d make sure the doctors and lawyers and taverna owners paid their back taxes. That right there should recover some funds.

    • Oh, and Lewis takes the viewer around the world of financial collapse; gender roles – “male over-confidence and need for conquering by control'” and, other countries “parodying American financial models” right into collapse –

      — and how Women are now emerging and taking over control in Iceland, by throwing the ALL of the bums out and starting over – with total reform.

      Among other things – the “culture” of government-backed wealth.

  5. CNN, in covering the Corzine story, took the opportunity to subliminally slime the Clintons by using a photo of Bill and Corzine together; hands clasped and raised overhead (don’t know when it was taken but was probably when one or the other won some contest). I’m sure there were no other pictures of Corzine to be had anywhere (snark) .

    Meanwhile, back at the ranch, the administration trotted Hillary out over the weekend to defend Obama’s foreign policy and Chris Matthews now loves him some Hillary.

    • Chris “tingly pants” Matthews is one of the reasons we have Obama in the first place. I remember him post early debate in Philly, deliberately targeting Hillary and almost cackling with menacing joy.
      If there’s on person who deserves to spend 100,000 years in purgatory, it would be Tweety.

      • Tweety said that although he was taken by JFK, but was really hit hard by Nixon. Why anyone pays any attention to the screeching snorter is beyond me.

    • With the “love” of a blind, deaf and dumb Cobra, charmed into a blithering idiot, by same.

  6. The reason California “had to pass” is that by state law, a delegate must vote for the candidate he or she represents based on primary vote allocations. We elected our Hillary or Obama set of delegates by district. On the first ballot, by law, they must cast their vote as so elected. Had this law not been shouted out by Allred and too well known, then California would have had all of its delegate votes donated to “The One.”

    Do you think the concert facilities will be as packed when “Rockstar” runs again? Me thinks his ad campaign won’t be able to fool as many as before with his historicity. No one seems to mention him to me, he’s even less than Bush in terms of daring to say his name. One self-described “liberal” who fell for him as the great progressive savior, says that he is at least a good writer, and then takes a Karl Rove slap at Hillary. I found his prose unengaging and didn’t care about the subject so didn’t read enough to judge his writing skills. I pointed out that maybe he should have run for Writer.

    • Yep, I knew about California’s law protecting the votes of primary voters. It’s too bad that New Jersey didn’t have one. But Corzine took care of us. We needn’t have worried our pretty little heads about it. God, what a joke. I still can’t get over it 3 years later. Some things are just burned in your memory. It was the biggest deliberate disenfranchisement of voters I have ever seen.
      No, I don’t think the Rockstar will have the same pull as 2008. I’m like you, I never saw what other people saw in him. And I never read his books, although if he writes like he talks, I would have found them tedious and deliberately misleading. My confusion would have been chalked up to not understanding his brilliant intellect. And in order to stay in the group, I would have parroted the same stupid praise for his mediocrity.
      I get the impression that Steve Jobs didn’t like him much. He didn’t put up with bullshitters.

      • The relationship Jobs and his wife had with the Clintons was personal. They loaned a house to them to use when Chelsea was at Stanford. All three attended his memorial service. Jobs would pick up the phone and talk with Bill, and the Clintons were at his home for dinner. I don’t see Obama as comfortable enough in his own skin to have a real chat with Jobs. He loves his toadies and fawners.

        • I don’t see Jobs sitting through a dinner with Obama without wanting to scream, “This is crap!” at him. I mean, seriously, could you ever see Jobs putting up with Obama’s excuses? No, no, Jobs would have seen right through him.

  7. Given how many reporters poured over every detail in Palin’s autobiography, it always struck me that no one did this for Obama’s books. They just assumed what he wrote is the truth. Seems to me he was creating his own history so questions about his past could be answered with, “but it was in the book.” How much of what we know of this man is utter fabrication?

  8. Steve was too smart for the big O. :)

  9. Naked Capitalism

    A writer for the Minneapolis CityPages managed to worm his way into a presentation to the annual meeting of the Minnesota Chamber of Commerce by US Bank’s CEO, Richard Davis. Even though Occupy Minnesota was protesting outside, Davis chose to ignore them. His speech made clear that the business community does not care about long-term self interest, let alone social responsibility. Housing and the foreclosure crisis were absent from the 2012 legislative priorities. But tax reform, which is code for shifting even more of the cost of government on to the small fry? Yeah, that’s a big deal.

    Davis’ apparent lone comment on the public ire against the banks was dismissive:

    “Everybody’s breaking the rules, blah blah blah,” Davis said at one point, mocking the general sentiment behind the public outrage before admonishing them to “Get over it.”

    Get over it? Ha!

  10. I’m not at all condoning Corzine’s behaviour at MF Global, but I do think it is unfair to blame him for Obama’s election. He was actually a very strong supporter and active surrogate for Hillary in the primaries. He came to multiple states, NH and OH jumping to mind and worked hard on her behalf. I think it is unfair to cast him as a diehard Obama supporter.

    • Um, he ditched her a little after super Tuesday.
      And as a NJ voter, I do blame him for not following the wishes of the state who definitively voted for Hillary in the primary. The move to unanimously award NJ’s delegates in the sham roll call at the convention was strategic and made Obama’s lead look insurmountable. If the delegates had been allowed to vote as they were elected, the separation between Obama and Hillary would have been to tiny to avoid a showdown. That’s why California didn’t get called in the roll call. By state law, they couldn’t change their votes. So, the DNC looked around for someone who would fork over the delegates without the burden of having any scruples. Corzine stepped up.
      I didn’t just fall off the turnip truck, Melissa.

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