Jon Corzine says he has no idea of the whereabouts of up to $1.2 billion in customer money that disappeared amid the implosion of the firm that he ran, MF Global. His “Sgt. Schultz” defense yesterday before a congressional committee would be pretty funny — if it weren’t a major Wall Street CEO and Obama economic adviser who was playing the goof from “Hogan’s Heroes.”
In fact, Corzine was booted from Goldman Sachs in the late 1990s for precisely the same reasons his MF Global is now bankrupt — his inability to manage risk. When he left Wall Street, he became a US senator and governor from New Jersey — whose already dodgey finances only got worse on his watch.
After Jersey voters fired him, he went to MF Global and vowed to make it a money machine, not unlike Goldman. He made big bets on troubled European sovereign debt — the bets that sank the firm when they were disclosed to investors.
What’s really striking is that Corzine, in changing the firm’s business model, appears to have had absolutely no idea what he was doing. The firm’s “books and records” were a mess, according to people I know involved in the bankruptcy. Others close to the firm tell me it didn’t have the infrastructure to adapt to a new business model that transformed it into something closer to a hedge fund than its traditional business as a broker of commodities.
The fault begins and ends with the Corzine, whose job as CEO is to make sure the firm’s plumbing actually works, particularly in times of crisis.
Yet Corzine was clueless during MF Global’s crisis, at least according to his testimony yesterday.