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Feb. 8, 2013
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Jewish World Review
Dec. 12, 2011
/ 16 Kislev, 5772
That $1.2 billion? It's around here some place
By
Dale McFeatters
http://www.JewishWorldReview.com |
Misplacing $1.2 billion is not a problem for most of us, at least in the circles in which we circulate.
But there was John Corzine before a congressional committee explaining that $1.2 billion of his customers’ money had vanished, seemingly overnight, and “I simply don’t know where the money is.”
Apparently the congressional rewrite of the financial regulatory laws intended to prevent Wall Street from making investors’ money disappear still has a few holes. The lawmakers should put aside that “job killing” nonsense, at least long enough to patch them.
Corzine was CEO of MF Global Holdings and hardly an innocent on Wall Street. He is a former governor, U.S. senator and CEO of Goldman Sachs.
He learned the money was missing only the night before the broker-dealer was to file for bankruptcy. Corzine said he was “stunned,” as who wouldn’t be, and asked his staff to recheck their work. They did and, indeed, the customer’s money was gone.
The root of the problem was a $6.3 billion bet on European debt that was going bad. How they came to make that bet should make interesting reading when the details come out. (The Great Wall Street Flop of ‘08-’09 was a bonanza for financial writers.) The Washington Post hints at one explanation: When the firm’s chief risk officer questioned the investment in European debt, the board of directors got another chief risk officer.
The law prohibits broker-dealer firms from using the customers’ money to trade on the firms’ behalf. Nonetheless, MF Global employees breached the firewall between the firms’ accounts and the accounts of its customers, apparently in a desperate bid to cover its bet on European debt.
Corzine insisted, “I never intended to break any rules.” His only explanation was that his staff may have misconstrued his instructions on the eve of the bankruptcy: “Someone could misinterpret, ‘We’ve got to fix this’ – which I said the evening of Oct. 30 – ‘We’ve got to find the money.’” That kind of a misunderstanding seems a considerable stretch, but considering the bonuses Wall Street pays and the price of arguing with the boss, maybe not so much.
Corzine, perhaps optimistic to a fault, said, “My own expectation is that even at these late hours the money will be recovered.”
Betting on the banks and counterparties who erroneously received MF Global customers’ money voluntarily returning it may be an even worse wager than European debt.
The FBI, federal regulators and a whole host of plaintiffs’ lawyers are on the case, and out of those investigations there should come useful recommendations. Congress should act on them and quit bleating about the perils of federal regulation. For some people, $1.2 billion is real money.
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Previously:
• 12/09/11 State Department Creates Virtual Embassy For Iran
• 12/08/11 If you've ever tweeted, you're in the Library of Congress
• 12/07/11 Discoveries go to the core of what makes us humans
• 12/06/11 Stealing elections badly in Russia
• 12/05/11 Sometimes paranoia is common sense by another name
• 12/02/11 When the U.S. truly became one nation
• 12/01/11 Last chance to snap up a Maybach
• 11/30/11 Iran wants respect without earning it
• 11/29/11 Surprise! Spider-Man may weave a profitable web
• 11/28/11 Italians entertain novel proposition: Paying their taxes
• 11/25/11 No time to let up on al-Qaida
• 11/24/11 Congress Quietly Abolishing Friday
• 11/23/11 Cleaning up after supercommittee implosion
• 11/22/11 Jailing minors with adults adds to problems
• 11/21/11 Brilliant strategy? Action by inaction
• 11/18/11They're going to eat horses, aren't they?
• 11/17/11 A pretend stick shift for pretend drivers
• 11/16/11 Clinton's vast experiences: Did NBC pick the wrong Chelsea?
• 11/15/11 Occupy protesters, you've made your point. Now, scat
• 11/10/11 Our vets are a national problem?
• 11/09/11 Requiem for a once-great sport
• 11/08/11 A toilet as smart as its occupant
• 11/07/11 Prerevolutionary gems in need of TLC
• 11/04/11 Feds must stop scam of stealing from dead children
• 11/03/11 Bank listens very closely to customer lynch mob
• 11/01/11 TV that's leading the people away from core socialist values
• 10/31/11 NATO should not be a victim of its success
• 10/28/11 Iran mulls getting rid of president and presidency
• 10/27/11 Bienvenidos a Dayton and bring your businesses with you
• 10/26/11 Archivists long for Obama's teleprompter
• 10/25/11 United Nations to run the Internet?
• 10/24/11 Attention, world: You've got the cash. We've got the houses
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• 10/18/11 U.S. plans limited mission in an Africa with no limits
• 10/17/11 Social Security's grave mistakes
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• 10/04/11 Christie should ignore jibes on his weight
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• 09/29/11 Europeans bristle at Obama's lectures
• 09/28/11 Jessica Rabbit for the defense
• 09/27/11 Russia learns outcome of next March's presidential election
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• 09/08/11 A jobs program at Obama's doorstep
• 09/07/11 Iran's government afraid of the water
• 09/06/11 Congress returns, tanned, rested and testy
• 09/05/11 Space nations must clean up after themselves
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• 09/01/11 Time to retire political pie in the face
• 08/31/11 Labor Day celebrates what, exactly?
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• 08/22/11 Tough times or not, parents shell out for school
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• 08/17/11 Time to prepare for the end game in Libya
• 08/16/11: Super Committee starts facing reality
• 08/15/11: World's fastest plane disappears even faster
• 08/12/11: British cops track rioters through security cameras
• 08/11/11: Relax. There is no Death Star
• 08/10/11: House pages run final errands
• 08/09/11: U.S. treading water on job creation
• 08/08/11: Uncle Sam, the world's permanent guest
• 08/05/11: Most 9/11 victims not on federal death records
• 08/04/11: Russian PM calls U.S. a parasite. He should be so lucky
• 08/03/11: Congress goes from one bind to another
• 08/02/11: D.B. Cooper may no longer be a mystery
• 08/01/11: Libya's latest weapon against NATO --- lawsuits
• 07/29/11: He'll always be known as Hot Wheels Handler
• 07/25/11: Recruiting children to save a dying town
• 07/22/11: Bachmann's admirable medical candor
• 07/12/11: Social Security's grave mistakes
• 07/08/11: Debt crisis need not be constitutional crisis
• 07/07/11: Startups entice new talent with kickball, treehouses
• 07/05/11: Stranded tourists get rare treat
• 06/30/11: The dollar Americans refuse to spend
• 06/27/11: The hangman doesn't cometh
© 2011, SCRIPPS HOWARD NEWS SERVICE
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