Wednesday, Dec. 14, 2011

Jon Corzine

When Jon Corzine, the onetime senator and governor of New Jersey and former head of Goldman Sachs, took over the helm of MF Global in 2010, he said he planned to remake the little known brokerage firm into the next Goldman. And in one way he did. Like Goldman, MF Global has come to symbolize what's wrong with Wall Street. In November, MF Global collapsed into bankruptcy. Worse, as much as $1.2 billion in client money has gone missing, much of which appears to be owed to farmers across the Midwest, who could face hundred of thousands of dollars in losses each if the missing funds are not found. Corzine certainly seems largely to blame for MF Global's demise. He pushed the firm to wager as much as $6.3 billion on European bonds, a good portion of which was done with borrowed money. As the Euro crisis intensified this autumn, the value of the bonds dropped, prompting MF's lenders to demand more money to cover its failing bets, which eventually wiped the firm out. Corzine has testified to Congress that he knows little about the missing funds, and that he doesn't believe his firm did anything improper. Nonetheless, the FBI and others are investigating. Already, MF Global's problems have prompted regulators to tighten the rules that stop brokerages from putting client money at risk.