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.

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Comment pages: 1 2

I mean it’s not like it was $1,200,000,000,000 so what’s the big deal?

bitterklinger on December 9, 2011 at 3:35 PM

Well, they’d better hop to it with this inquiry and turn him loose. I thought Corzine was supposed to replace “TurboTax” Timmy as Sec. of the Treasury for Obama’s second term. Time’s a wastin’ . . .

tpitman on December 9, 2011 at 3:45 PM

Just imagine how far up the creek we’d be if this guy was the Treasury Secretary.

LeeHinAlexandria on December 9, 2011 at 3:58 PM

And to think this creep could’ve still been Gov. of NJ.

This arrogant narcissistic POS would fit right in with Obozo’s cabinet.

Meh, $15 trillion – what’s another billion & change?

ICanSeeNovFromMyHouse on December 9, 2011 at 4:08 PM

But not to worry about the missing customer dough . . . ’cause guess who may have “found” it?

Or, at least cashed in on it!

[The WSJ article requires a subscription to read it its entirety.]

Corzine’s Loss May Be Soros’s Gain
Investor Places Big Bet on Euro Debt, Buying MF Global Former Holdings

BY GREGORY ZUCKERMAN AND DANA CIMILLUCA

Investor George Soros’s family fund bought about $2 billion of European bonds formerly owned by MF Global Holdings Ltd., the very debt that helped force the securities firm to file for bankruptcy protection Oct. 31, according to people close to the matter.

Under the direction of MF Global’s former chief executive, Jon S. Corzine, the firm accumulated $6.3 billion of short-term debt issued by various European nations, mostly from Italy, in a bid to boost trading profits. Over the summer, this debt led to nervousness by investors, regulators and ratings companies, resulting in the firm’s collapse just over a month …

Trochilus on December 9, 2011 at 4:25 PM

And every conservative candidate, all bloggers and pundits, should grab Hannity’s video of Obama and Biden embracing Corzine as their honest economic genius that this nation must rely on.

If Corzine was a Republican, that clip would be on endless rotation on the cable networks, and it would be the lead off on the regular network broadcasts for days on end.

BTW, didn’t Sorbanes-Oxley essentially eliminate the “I know nothing, nothing” defense? Forget the press, shouldn’t there be a criminal investigation going on here?

platapapin on December 10, 2011 at 1:47 AM

Sorry, pal, but there are no do-overs re: fraud.
I mean really, how many years did Corzine think he could get away with his various shenanigans?
Maybe this was his One last shot at it while we’re stuck with a Democrat POTUS?
Sadly, it may take a GOP President and Senate to prosecute the massive frauds in and out of D.C. (you just know that ØbahØlder won’t), but Corzine needs to be on that list.
~(Ä)~

Karl Magnus on December 10, 2011 at 6:55 AM

He should be drawn and quartered.

gothicreader on December 10, 2011 at 8:02 AM

Just another Liberal stealing money from others. This would not stop President Zero from appointing him to Treas Sec; mater of fact this is an enhancement for him, like Tax Cheat Timmy.

democratsarefools on December 10, 2011 at 10:57 AM

This hearing is such a joke. I got the whole story on Roger Hedgecock’s show yesterday. The regulations in the US prevented MF Global from making the size of the speculation market bet that Corzine wanted to make. So they created a subsidiary in Britain where there are no regs like we have. The bet was made from Britain using American depositors’ accounts as collateral.

Soros saw the huge stupid bet and called it. Soros was right, financially, and that’s where the money went – to pay off the bad bet on the value of the euro.

I don’t play the markets but even I’m smart enough to know that if Soros has not taken the currency market position I want to take, there’s something wrong with the position.

Corzine needs to be destroyed. Utterly.

platypus on December 9, 2011 at 10:37 AM

Do the right people know about this? I actually understood this, but most explanations of financial doings are so jargony that I can’t get a coherent picture of what transpired, because I’m not all that financially literate. I wish I’d heard of Robert Kiyosaki when I was young.

tanarg on December 10, 2011 at 10:58 AM

Corzine; Democrat; Waffling on true story; blaming others; WaPo reporting it; George Soros in picture; improper use of investors funding; Obama; Geithner…It’s almost too much information to absorb…

Dawgwood on December 13, 2011 at 10:54 PM

Comment pages: 1 2