In his 1990s heyday at Goldman Sachs, Jon Corzine occasionally shocked colleagues by greeting them with the word "peace". It was hardly in tune with the Goldman ethos, but Corzine has at least remained consistent. His resignation letter from MF Global last week was "a classic of its kind", says The Times. Corzine expressed "great sadness for what has transpired" as if he had nothing to do with the giant bets that caused the seventh largest bankruptcy in American history. Peace to you, Jon, but sometimes "sorry" isn't good enough.
The speed of the broker-dealer's collapse was shocking (see below), marking a "stunning reversal and spectacular defeat" for Corzine, who "thought he could turn MF Global into an investment bank rivalling Goldman Sachs" when he took it on in 2010, says the FT. A former governor of New Jersey, he was a prominent figure in the Obama camp tipped by some to take over from US Treasury boss Tim Geithner. He now stands accused of breaking every risk-management rule in the book possibly with clients' money. "Sometimes it seems there are two Jon Corzines," says Reuters. There's the "statesmanlike" politician, prone to pious speeches about the need for stiffer bank regulation; and then there's the "risk-loving trader with a thirst for profits".
There are plenty on Wall Street who believe Corzine "had it coming", says The Daily Beast. The son of an Illinois farmer, he clawed his way into a job at Goldman Sachs via the Marine Corp reserves and an MBA from Chicago. Once there, his amiable manner and iron trading nerves propelled him to the top. However, his management style was "erratic at best". He led Goldman into "its first major financial morass" in 1998 when he approved trading positions similar to those taken by the doomed hedge fund Long Term Capital Management. That year, the simmering "alpha war" between Corzine and his co-chief Hank Paulson erupted into full-blown hostilities, notes Vanity Fair. Corzine went behind Paulson's back to discuss a merger with Mellon Bank. In the ensuing bloody skirmish, he was ousted.
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Due to Goldman's 1999 initial public offering, Corzine made $500m enough to finance his move into leftish politics. He won a senate seat for New Jersey in 2000 and then the governorship despite his ex-wife's message to voters that "he let his family down, and he'll probably let New Jersey down too", says The Independent. Ultimately, she was vindicated. When Corzine was nearly killed in a car accident in 2007, because he wasn't wearing a seat-belt, "it became a metaphor for his administration". In 2009, he was kicked out. Corzine bet his reputation on his second Wall Street coming, says The Economist. Now that too has crashed in flames. He might once have got away with styling himself the "Comeback Kid". No longer.
The man who united America
Jon Corzine seems to have achieved the impossible, say Antony Currie and Jeffrey Goldfarb on Reuters Breakingviews. He has united America. Not only does he embody all that Occupy Wall Street hates: "the elite 1%, failed high finance and compromised politics". But his liberal agenda, displayed so disastrously in New Jersey, is part of what catalysed the Tea Party. If FBI investigations into an alleged mishandling of client funds (some $663m remains missing) find anything questionable, "the crisis may finally have its fall guy".
Regardless of whether Corzine's actions were criminal or not, they were astonishing, says Joe Nocera in The New York Times. To read an account of Corzine's tenure at MF Global "is to wonder how he missed the 2008 crisis". He began amassing a $6.3bn position in bombed-out eurozone bonds late last year, betting that prices were bound to rise because "Europe wouldn't let these countries go". But as the crisis wore on, prices continued to plummet. Right to the last Corzine refused to back down. But when the firm was hit by credit downgrades, and trading partners began pulling out, MF Global collapsed.
The firm maintains it will repay its army of 50,000 unsecured creditors, says Sean O'Driscoll in The Sunday Times. Many aren't convinced. Shareholders, meanwhile, will probably get zilch. That's the price of falling for the "intoxicating" offer of a chance to buy "the next Goldman Sachs". They weren't the only ones bewitched, says Mark Williams in FT. How else can one explain why Corzine's untried and untested "Cinderella" of a firm was given "fast-track approval" to become one of 22 elite "primary dealers" licensed to trade with the Federal Reserve Bank of New York? That gave MF Global "a unique and profitable status". It's probably just a coincidence that the Fed president, William Dudley, was a former chum of Corzine's at Goldman Sachs.
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