by Nick Paumgarten | The New Yorker
November 4 2011
The collapse this week of the broker-dealer MF Global and the comeuppance of its chief executive Jon Corzine, who resigned Friday, have been and will be put to many political and rhetorical purposes. MF Global’s bankruptcy has been called, possibly, the first domino in a potential collapse of the European banking system; in this rendering, it’s a rough analog to the failure, in the spring of 2008, of Bear Stearns, which presaged the mayhem of autumn. It might well be cast as a catalyst for more government regulation, or smarter regulation; to some, it might even be a case study in overregulation. (Every rationale for regulation seems to contain, as yang to its yin, an argument that regulation is actually to blame.)
Corzine’s downfall is an update on Icarus, an illustration of hubris. It reminds us that leverage kills, that it is dangerous to pick up nickels in front of a steamroller, that risk is risky, that pigs get fat while hogs get slaughtered. It complicates the Democrats’ hopes of harnessing anti-Wall Street fervor in the Presidential election, because Corzine has been one of Barack Obama’s most generous supporters—a possible future Treasury Secretary. The Republicans will not soon let this one go. It certainly further tarnishes the reputation of Goldman Sachs.
Corzine, a former C.E.O. of Goldman, took over a company partially owned by the firm of another ex-Goldmanite, Christopher Flowers, and managed, in a year and a half, to destroy it, in part while resisting oversight from a government regulator (the Commodity Futures Trading Commission) whose chairman, Gary Gensler, is also an Goldman alumnus. It further damages the perception, or myth, that a becoming a partner at Goldman Sachs bespeaks brilliance, or insures success or a lifetime inclusion in the vampiresquidspiracy (although you can find whisperings of a conspiracy theory that Goldman planted Corzine at MF Global in order to destroy it—a notion that is almost as beguiling as it is ludicrous). A report, in the Times, had Flowers showing up at the doomed eleventh-hour save-this-firm discussions in “mismatched shoes”—picture a loafer on one foot, and a white beaded moccasin on the other, a Wall Street gloss on Vinny (the Chin) Gigante wandering around Mott Street in bathrobe and slippers.
Corzine’s collapse is also an occasion for schadenfreude, not only for those among Occupy Wall Street’s 99 per cent, who’d be ready to pitchfork him to pieces just because, but also for the tiny cowering minority, who may resent Goldman for its perceived arrogance or cunning, or who may question the narcissistic folly/civic harm of Corzine’s spending over a hundred million of his own money to get elected to public office. The sentiment, among his peers, was that Corzine wasn’t so great a trader to begin with, and that in the years since he’d left Goldman, his skills, such as they were, had got rusty or outdated. (“I am loving every minute of this,” a hedge fund manager said in an e-mail.)
Continue reading at New Yorker
- Former Gov. Corzine steps down at MF Global (bonjupatten.wordpress.com)
- MF Global Debacle Shows Not Much Has Changed (online.wsj.com)
- Thick As Thieves: Corzine Crony Relented on Rule-Change That Might Have Saved Loss of $630 Million of Customers’ Money (minx.cc)
