Corzine Live! Follow Along With House Testimony

Jon Corzine is being questioned again by the House Financial Services Subcommittee on Oversight and Investigation. 

So far, the former New Jersey Democratic senator and governor has tried to blame the ethnics in the back office for assuring him that it was legal to use customer account funds, which are and were widely known to be sequestered under both law and industry practice, to cover MF Global's ungoing losses. 

Corzine is facing multiple lawsuits and a possible criminal investigation for events over the course of a week or so in late October, during which some party or parties at the respected institution disappeared more than a billion dollars from customer accounts. 

Watch it live. Comment at will. 

3:37 update: Rep. Stephen Fincher (R-Tennessee) gets a good admission: Corzine has not at any time participated in the effort to find the stolen funds. 

3:43 update: If you're a business history buff, there's a pretty good Nick Leesonish angle here in which a scuzzbucket brings down a hallowed institution. MF Global traces back to England in the 1780s and for almost two centuries supplied a third of the British Royal Navy's demand for rum, sodomy and the lash [pdf]. Since being spun off from Man Group Plc. in 2007, MF Global has been a major player in derivatives, a market that has long roots (as Fincher noted) in American agricultural history. 

3:53 update: "You libertarians are in favor of securities fraud by politically connected politicians" comment is in the house! Drink! 

4:28: update: Pretty slow going, but it's great the the Corz was given a bonus for enhancing the company's "regulatory profile."

4:30: "Somebody forgot to turn off the computer." 

4:33: Corzine's done. Other MF people going now. (Potentially interesting. Other witnesses have contradicted Corzine's testimony before.) 

Comments

[John Thacker]

Of course, SarbOx makes ignorance not a defense for top executives.

[John Thacker]

And I believe Corzine was a sponsor of that particular petard.

[John]

It wasn't supposed to apply to him. It was to regulate the little people silly.

[foie gras]

I smell conspiracy. Cspan keeps gong to a black screen with no audio. Anyone else?

[Rich]

From my (& others') experience C-SPAN feeds suck. I'm looking for a better one.

[Mint Berry Crunch]

I still can't forgive HBO for doing the same just as I was about to find out if Tony Soprano was getting whacked.

[John]

Am I getting too hopeful that this scumbag will end up in a federal prison? Corzine going to the slammer would be almost as good as Spitzer or Bloomburg going there.

[Apatheist]

But not as good as Holder going there.

[John]

I wouldn't even take pleasure from that. Holder is so horrible and has done so much damage to this country, nothing that happens to him would make me feel good.

[tarran]

Are you sure?

What if you read in the news that he had been bitten by a brown recluse spider on a sensitive part of his anatomy, and had to have the stalk amputated after it became gangrenous?

And, if the docs left the testes intact, the frustration of the urges that could never be filled, coupled with the phantom-limb pain, a pain that no analgesic could ever reduce, wouldn't they give you some measure of satisfaction?

[John]

Ok I might be a little happy.

[Holder's Wife]

As would I.

[Holder's Girlfriend]

as long as he still has cash

[Holder's Boyfriend]

as long as he still has ass and cash

[Pablo]

Don't know too much about Corzine but he seems to embody the Wall-St-to-Washington-crony-capitalism-revolving-door as well as anyone. I do remember when he was NJ gov. he was in some car accident going over 90 mph and not wearing his seat belt (those laws just apply to little people). Apparently to moderate some kind of love fest between Don Imus and the female basketball players he insulted. So yes there is some schadenfreude here.

[John]

First question should have been "so did you wear your seat belt today?"

[Old Soldier]

I doubt prison - but I bet he's sued until even his vast wealth is gone.

[DJF]

"""which are and were widely known to be sequestered under both law and industry practice, to cover MF Global's ungoing losses""'

But is it against the law? And the standard "industry practice" is just whatever the industry does so its meaningless. If there was a contract then it depends on what the contract between the customer and MF Global says.

This article http://lewrockwell.com/french/french143.html claims that there is this clause in the MF Global contract which opens up a huge hole in any sequestration. Anyone know what is in the MF Global contract?

""7. Consent To Loan Or Pledge You hereby grant us the right, in accordance with Applicable Law, to borrow, pledge, repledge, transfer, hypothecate, rehypothecate, loan, or invest any of the Collateral, including, without limitation, utilizing the Collateral to purchase or sell securities pursuant to repurchase agreements [repos] or reverse repurchase agreements with any party, in each case without notice to you, and we shall have no obligation to retain a like amount of similar Collateral in our possession and control.""'

[Johnny Clamboat]

That applies to equity bought on margin. It does not apply to free credit balances. Those must always be sequestered.

[Restoras]

What a racist bastard, blaming the ethnics in the back office!

[WTF]

I think where the alt text says 'less' it really means 'more'.

[WTF]

Corzine has not at any time participated in the effort to find the stolen funds.

But he will. Just like O.J. finding the 'real' killer.

[Pip]

You laugh, but that's why OJ got himself jailed. He heard the the killers were in prision on an unrelated conviction and his only hope of getting to them was incarceration in the same prision.

I can't wait till his book about it is published.

[shrike]

I thought you no-regulation libertarians were all for letting finance companies bilk unsuspecting traders and depositors?

God damn! You guys sure as hell cheered when Bush, Harvey Pitt, and Chris Cox refused to enforce regulations 2005-08.

[John]

Yes Shrike, because objecting to any regulation is the same as objecting to all regulations including those that prohibit outright theft.

[shrike]

There is certainly no "theft" here. Corzine over levered, bought Euro trash bonds like a dumbass, and ran the company into the ground.

MF had a long history of CFTC infractions in 2007-08 (same stuff) and Corzine joined March 2010 just in time to shed light on the past idiocy by burying the firm in bad bonds.

[heller]

Of course taking someone's money and doing something with it without their knowledge is not theft! Of course!

[John]

When you take your clients' money and use it for purposes they didn't agree to, that is theft. Lawyers and bankers and accountants all over America have been disbarred and jailed for such things.

Corzine is a thief. Just because he plays on your team doesn't mean it is okay for him to steal.

[shorter Shrike]

It's okay when our guys do it!

[shrike]

It is not theft. It is called re-hypothecation.

http://newsandinsight.thomsonr.....n_scandal/

[John]

A legal loophole in international brokerage regulations means that few, if any, clients of MF Global are likely to get their money back. Although details of the drama are still unfolding, it appears that MF Global and some of its Wall Street counterparts have been actively and aggressively circumventing U.S. securities rules at the expense (quite literally) of their clients.

MF Global's bankruptcy revelations concerning missing client money suggest that funds were not inadvertently misplaced or gobbled up in MF's dying hours, but were instead appropriated as part of a mass Wall St manipulation of brokerage rules that allowed for the wholesale acquisition and sale of client funds through re-hypothecation. A loophole appears to have allowed MF Global, and many others, to use its own clients' funds to finance an enormous $6.2 billion Eurozone repo bet.

And he is not a thief how? Jesus Christ Shrike take your meds once in a while.

[shrike]

That is right.

"allowed"

"loophole"

"circumventing"

Its all legal.

I'll bet you $10,000!

[John]

First, even if it is legalized theft, it still is theft and Corzine is still a thief. Second, if there was a loophole, that just shows that the entire system has been taken over by the regulated, which is exactly what libertarians said would happen.

Again, you only defend Corzine because you will defend anyone on your team.

[shrike]

Now you're catching on.

This reminds me of the OWS progressive assholes screaming for Jamie Dimon and Lloyd Blankfein to be scalped for MASSIVE MORTGAGE FRAUD against the poor little people.

I had to tell the dumbasses that talking rubes into liar loans was perfectly legal! You have nothing.

You, John, have nothing. Just like the OWS idiots don't.

[John]

It is not clear it is legal. Second even if it were, so what, that doesn't excuse Corzine.

Take your meds Shriek.

[shorter shrike]

I fucking told you, it's okay when our guys do it!

[heller]

legalized theft ? theft

[heller]

shrike|12.15.11 @ 4:09PM|#|show direct|ignore
It is not theft. It is called re-hypothecation.

shrike loses.

[Paul]

Shrike: deregulashunz!1!11one

[John Thacker]

You mean the ignoring of regulations that allowed Bush and Paulson to shovel money to politically connected banks in contradiction to what TARP claimed it would do? I thought you were the one sure as hell cheering about that, shrike, not the rest of us.

[John Thacker]

I oppose SarbOx because, as Corzine's going to make clear very soon, it appears to be absolutely toothless in actually catching and prosecuting the guilty, yet a hell of a lot of compliance costs for the innocent.

[Restoras]

But think of all the compliance jobs that were created!

[Drake]

Both correct. Sox was created to enforce "honest" accounting on Balance Sheets. I was shocked the first time I went through a SOX audit. All they cared about was my justification for accruals. They didn't care a bit about where the payments went.

I could have been embezzling millions and nobody would have noticed.

[Mike M.]

Go crawl back under whatever fucking rock you just crawled out of. Nobody wants you around.

[A Fucking Rock]

Hey, don't you dare send him to me!

[Lord Humungus]

hurr-de-durr

[Trespassers W]

For some reason, this song is going through my head...

I would love to tour the Southland
In a traveling minstrel show
Yes I'd love to tour the Southland
In a traveling minstrel show
Yes I'm dying to be a star and make them laugh
Sound just like a record on the phonograph
Those days are gone forever
Over a long time ago, oh yeah

I have never met Napoleon
But I plan to find the time
I have never met Napoleon
But I plan to find the time yes i do
'Cause he looks so fine upon that hill
They tell me he was lonely, he's lonely still
Those days are gone forever
Over a long time ago, oh yeah

I stepped upon the platform
The man gave me the news
He said, You must be joking son
Where did you get those shoes? Oh hoo
Where did you get those shoes?

Well, I've seen 'em on the TV, the movie show
They say the times are changing but I just don't know
These things are gone forever
Over a long time ago, oh yeah

[John]

What is funny about this whole thing is that he stole the money to buy Euro bonds. He didn't steal it to pay for mistresses or some lavish lifestyle. He stole it to buy eurobonds. That is just sad.

[tarran]

Hey, imagine if it had worked out!

he'd be the savior of Europe. In france that rep, that money, and the chauvinistic culture could have paid off with some pretty spectacular bunga-bunga parties.

[Montani Semper Liberi]

He didn't steal it to pay for mistresses or some lavish lifestyle.

Or a non-thrift store suit. If I had that kind of money, all my shit would be custom tailored.

[John]

He does look like a dirty hippie they cleaned up to talk to Congress. I don't make that kind of money and I wear better suits and have a better haircut.

[T]

When you have that kind of money, you don't need good suits and a haircut. You are no longer judged on appearance when you're a billionaire.

[John]

Yeah. But I still would look good. I like looking nice. Maybe that is why I will never be a billionaire.

[-]

You'd have to get a job first, John.

[John]

Is that you MNG? Still angry about having to defend the indefensible?

[Restoras]

Has he slunk back to defend Holder and his FF buddies??

[Mike M.]

He does look like a dirty hippie they cleaned up to talk to Congress. I don't make that kind of money and I wear better suits and have a better haircut.

And besides, you're freaking going bald! Try looking in the mirror dude, because you look completely ridiculous. Either shave the rest of your head or get a toupee or something.

[RedDragon6009]

I recommend Mubarak's tailor...
http://www.dailymail.co.uk/fem.....wrong.html

[Rich]

Corzine has not at any time participated in the effort to find the stolen funds.

Of *course* he hasn't. If he did, he might have some clue about where they went. Plausible deniability, don't ya know.

[SugarFree]

Corzine looks like he just lost a bum-fight.

[Restoras]

+1

[Pablo]

+2 he went up against Rufus

[Drake]

The first of many he will be in once the lawsuits hit.

[sloopyinca]

When you get tired of watching Corzine obfuscate, watch A Klingon version of Eminem's Without Me.

[RoboCain]

Here's the official video:

http://www.youtube.com/watch?v=LBtj4WoC6XA

[Graphite]

You know that all of Corzine's buddies in Washington -- especially all the ones getting their campaigns funded by Goldman Sachs -- are just *dying* to let him off the hook on this. But the whole thing stinks so badly of corruption, even Washington DC can't stand the smell.

[John]

Yeah. When you fuck up and steal a billion dollars, that is a problem. They all hate the idea of one of their own going to jail. But Corzine is so incompetent and so corrupt, they are going to have to make an example out of him.

But I wouldn't worry. Ten to one says BO will give him a pardon after the 2012 election.

[Graphite]

Oh yeah for sure. It'll be a great way for him to flip the bird to all the disenchanted progressives who held their noses to vote for him.

[Graphite]

Also, as more of the facts come out it's looking like there may have been some impropriety on JPMorgan's part in nipping out a ton of cash with collateral calls, and then buying some of the problematic eurobonds off of the bankrupt MF Global at a big discount to the going market price. So this could all be a big ruse to fry a small fish like Corzine so that the really big, corrupt, connected fish that is JPM can be set free.

There are even rumors JPM may have *reversed* outgoing wire transfers to customers who were pulling money from their MF Global accounts just before it went under: http://brucekrasting.blogspot......tched.html

[John]

Wow. And no, JP Morgan will never be held accountable for that. Corzine may be in a lot of trouble.

[Circular Commenting]

3:53 update: "You libertarians are in favor of securities fraud by politically connected politicians" comment is in the house! Drink!

Live-blogging the commentary on the live-blogging!
Driiiink!

[Episiarch]

3:53 update: "You libertarians are in favor of securities fraud by politically connected politicians" comment is in the house! Drink!

You do realize that this is a spoof of shriek and you're all getting played, right? I guess not.

[John]

I am not sure you can spoof skriek. It is a known scientific fact that genuine mental illness cannot be faked.

[Episiarch]

Fine, John, have fun arguing with a spoof.

[White Indian]

.....yawn.....I thought I heard someone call....

[Circular Commenting]

Replying to the commenting on the commenting on the live-blogging!

Yeah, I'm the one getting played.

Hahahahaha!

[Barack Obama]

None of this would have happened if the voters of New Jersey had re-elected Corzine as governor, like I told them to do.

[Fist of Etiquette]

NO EVENING LINKS. Obviously, I take no pleasure in being vindicated.

[Episiarch]

They come at 2PM, boner. It's not 2 yet.

[RoboCain]

They have been posted earlier.

[RoboCain]

"Posted on December 14, 2011, 3:59PM"

[Fist of Etiquette]

He lives in some fantasy world where it's three hours behind what time it really is.

[RoboCain]

Then 3:59 that would be 12:59 his time, which is earlier than 2.

[Fist of Etiquette]

He's also an idiot.

[RoboCain]

Regardless, it still looks like Evening Links are no more.

[Fist of Etiquette]

I called it. Either it was a ploy to get donations or Cavanaugh found another shiny object.

[Sanity Clause]

Re-hypothecation. I buy a house and use the house as collateral to secure the mortgage. The bank then uses the house to secure a mortgage of their own. The bank the loaned the first bank money, then uses the same house to secure another loan. Whoever defaults first, robs the rest, right?

Legal? Yes. Ethical? Maybe. Were all parties involved aware? Probably not.

Apparently, MFG was using customer segregated accounts that were posted by clients as collateral for margin calls, which, BTW, is required by the CFTC, as collateral to lever up their Euro holdings. The Euro holdings didn't pay, and the customer funds in the segregated accounts went bye-bye. Bye-bye.

Now, these transactions were all off-balance-sheet. So, possibly, the shareholders, investors, and regulators were not fully aware of their potential for failure. If that is the case, the company should be liquidated and upper management and possibly board members should be held financially and possibly criminally liable. (No limited liability for fraud, bitchez). But, this is all very similar to what Lehman did, and we all know what happened to Dick Fuld - not a mother fucking thing.

And yes, I used a mother fucking Oxford comma.

[Jeffersonian]

And what Jon Corzine did for MF Global, he did for New Jersey.