This is an interesting article on MF Global and Jon Corzine more broadly.
It is the story of industry wide greed, influence peddling, and the weakening of the regulatory agencies in a combination of powerful persuasion and anti-regulatory ideology aggressively promoted by money from self-serving financial interests.
It is good to remember that attempts to regulate and reform the industry are blocked by a powerful minority at almost every turn, and that the CFTC has two Republican appointees who oppose most of the proposals that Chairman Gensler puts forward.
However, it is not clear at all what support Gary Gensler and his Democratic colleagues were able to obtain from the economic people in the Obama Administration, the tone of which was set by Tim Geithner and the now departed Larry Summers. The Obama Administration has been particularly hard on whistleblowers and internal dissent, and very quick to compromise on financial matters.
One thing that is lacking in American politics, that I have always admired in the Europeans, is the principled resignation. That is a tall order for a group of leaders who can barely scrape up enough moral fiber to take a principled stand, even on their own elected mandates, unless it is in the service of their rich and powerful benefactors in their ongoing game of thrones.
Vanity Fair
Jon Corzine’s Riskiest Business
By Bryan Burrough, William D. Cohan and Bethany McLean
"...Gary Gensler, a former Goldman colleague of Corzine’s, wanted to restrict the ability of a firm to invest its customers’ assets in sovereign debt and to use its customers’ cash to make loans to itself.
MF Global (along with the rest of the industry) freaked out, writing to the C.F.T.C. that the agency was trying to “fix something that is not broken.”
Corzine personally lobbied each of the C.F.T.C.’s commissioners, and after Gensler realized he didn’t have support from anyone, he was forced to delay a vote that was scheduled for July..."
Read the full article here.
