Corzine: I didn’t tell my company to use customer dollars, and if I did, I didn’t mean it
posted at 9:55 am on December 9, 2011 by Ed Morrissey
I don’t know. Maybe he should have stuck with the Fifth Amendment:
Jon S. Corzine, the former U.S. senator and governor who presided over the collapse of the commodities brokerage MF Global, told lawmakers Thursday that he never intended to authorize a transfer of customer funds to the firm’s accounts and that if he did “it was a misunderstanding.”
Under pointed questioning by members of the House Committee on Agriculture, the New Jersey Democrat would not rule out the possibility that someone at the firm misinterpreted him as suggesting that the struggling firm tap into investors’ funds.
In his prepared testimony submitted before the hearing, Corzine said he could not explain what happened to “many hundreds of millions of dollars” that the firm was holding for customers. He said he was “stunned” to learn shortly before the firm sought bankruptcy protection at the end of October that MF Global could not account for the money.
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” Corzine said, according to the testimony.
The firm was required to keep clients’ money separated from its own. But more than $1.2 billion might be missing, the trustee overseeing the firm’s liquidation said last month. An attorney for the trustee confirms that assessment in testimony submitted for for hearing.
Well, what could Corzine have said that would have contributed to a potential “misunderstanding”? “Gee, guys, wouldn’t it be great if we had another billion or so dollars we could tap to back up our play on Euro debt”? Or maybe,”Do you think anyone would notice if a billion or so in customer assets went missing”? This is the kind of statement that a competent cross-examiner would seize in an effort to drill into Corzine’s testimony.
This gets to the heart of the puzzling easy ride that Corzine has received from the media thus far. Thanks to the public outrage over the Enron fraud (and MCI and others as well), Congress passed the clumsy and costly Sarbanes-Oxley regulations that presumes that CEOs know about all of the fiscal moves a company makes. Corzine’s statement that “Other questions, given my specific role in the company, will be questions for which I have no personal knowledge,” would be rejected entirely in any other context. So far, the media has treated Corzine as more of a victim of circumstance than a man who ran an enterprise that absconded with $1.2 billion of his customer’s assets.
Give the Washington Post credit for mentioning that Corzine is a Democrat and a fundraiser for Barack Obama, two points that often get neglected in other reports. However, they resist connecting the dots as much as possible. For instance, they report on Corzine’s assertion that his lobbying against tougher enforcement that would have caught MF Global’s fraud did not amount to “undue influence”:
In his prepared testimony, Corzine also recounted that he lobbied against regulators’ effort to tighten restrictions on how brokerages such as MF Global could invest clients’ money.
The proposed rules change was championed by Gary Gensler, chairman of the Commodity Futures Trading Commission and a fellow alum of Goldman Sachs. Corzine said he argued against the change in a July conference call with Gensler. Gensler has recused himself from the agency’s probe of MF Global.
At the hearing, Corzine told lawmakers that he “did not exert undue or improper influence on regulators.”
However, with the exception of a single reference to Corzine as a New Jersey Democrat, there isn’t anything preceding this in the article which puts Corzine’s influence in the administration in any context at all — and nothing appears for eleven more paragraphs:
He used the personal fortune he built at Goldman to fuel his ascent to the U.S. Senate, where he served on the Banking Committee. He later won the New Jersey governorship. In 2007, he was badly injured in a car crash.
He ran for reelection as governor of New Jersey in 2009 but was defeated by Republican Chris Christie. As Corzine receded from the public eye, Christie gained national prominence and recently considered jumping into the presidential race.
At MF Global, Corzine was returning to his Wall Street roots. The job could have served as a step toward a political comeback. As recently as last spring, he hosted a fundraiser for President Obama.
Er, yeah — and as recently as this summer, Obama made Corzine his liaison between Wall Street and his re-election campaign. That’s the context in which Corzine’s pushback against the regulators took place, a fact that Washington Post readers won’t know unless they read about it somewhere else.
It’s not quite “name that party,” but it’s close.