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Is Jon Corzine “Too Big To Be Indicted”?

Posted by Larry Doyle on November 7, 2011 7:16 AM |

Any manger—let alone a chief executive officer—worth his salt should be laser focused on protecting the interests of his constituents, including shareholders, creditors, and employees.

Jon Corzine is not worth his salt or much of anything else these days as he protected none of his constituents.

While Jon Corzine may have fancied himself as a titan in both political and financial circles, the simple fact is the demise of the once renowned firm MF Global on his watch, relegates Corzine to the rubble with other outsized egos humbled and humiliated by Mr. Market. 

See Jon, while Uncle Sam bailed out some of your pals a few years back, you and MF Global did not run in those circles.

I find it interesting that many have written that Corzine was looking to resurrect his financial career while attempting to build a firm in the image of his former employer Goldman Sachs. The fact is the efficacy of the Goldman business model these days is very much in question in the midst of the current economic crisis.

Corzine massively miscalculated the liquidity and counterparty credit risks and lessons which have been on display for all to see and study over the last three years. Is Corzine stupid? I don’t think so. Is Corzine blind? I do believe he is. Blinded by what? While I do not know Jon Corzine personally, I have seen and known many like him on Wall Street, who are literally blinded by their own egos.

An outsized ego improperly managed is destructive for it will bring a blindness to understanding and properly managing risk. I firmly believe the reality of outsized egos brought down both Bear Stearns and Lehman Brothers. The management of those firms have tried to save their own legacies over the years. Corzine will likely try to do the same.

Where were the regulators, including the CFTC, FINRA, and the SEC who were charged to thoroughly monitor the risks and degree of leverage employed by MF Global?

Can these same regulators who failed to properly oversee MF Global be trusted to provide a full accounting of what happened to the customer funds held at the firm? What about the Department of Justice? Will those occupying offices at 1600 Pennsylvania Avenue also get involved? Can we trust all of these people and entities that the law of the land will be upheld?

While MF Global was certainly not too big to fail, the real question before those in Washington and on Wall Street is whether Jon Corzine is ‘too big to be indicted’? Nobody is supposed to be that big but in light of the ongoing incestuous relationship between Wall Street and Washington, is there any doubt that many are considered to be “that big”.

Customer funds are supposed to be sacrosanct. If Corzine and team violated the integrity of these funds which it appears they did, then I believe the fullest extent of the law should be applied. Will it?

Let’s forget about Corzine and redirect our focus to those who made their living at the firm. How many thousands of innocent individuals and families will now suffer because of the blindness and egos of Corzine and his team?

This situation truly smells.

Questions, comments, constructive criticisms encouraged and appreciated.

Larry Doyle

Isn’t it time to  subscribe to all my work via e-mail, an RSS feed, on Twitter or Facebook? Do your friends, family, and colleagues a favor and get them to do the same. Thanks!!

I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.

  • http://cashflowmantra.com cashflowmantra

    It absolutely does smell. Assuming that customer funds were somehow involved and laws were broken, I would say that Corzine would serve as a great sacrificial lamb for the Democrats in Washington. It would look real good to prosecute one of their own given the Occupy movement.

  • Peter S.

    If it walks like a duck…

    LD, you’re one of the few voices in the industry that is willing to expose its’ rotten fruit. I would imagine you would not feel comfortable being commended for being a good neighbor – but that you are.

  • coe

    Hubris – a fatal flaw from the days of classical Greece..the whole MF situation reeks of one arrogant man rolling the dice – huge upside/limited personal downside (not enough of his own skin in the game – ie capital invested/ridiculously overstuffed personal balance sheet to fall back on/etc)…what about the rest of the employees? (trust me, there are tons of middle/back office folks just trying to make a living in these tough times) what about the clients? Shame on Corzine…double shame on his butt-boy Chris Flowers for recruiting him – the cult of celebrity certainly extends to high profile bankers and lawyers..btw, this is exactly what the rest of the street does not need in these regulatory times – another rogue player heading off the reservation – taints the whole industry yet again…I hope they throw him/them in jail!






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