Tuesday, 06 December 2011


Ken Berwitz

In a fair and just world, jon corzine, the former Democrat Senator, then Governor, of New Jersey and, most recently, the head of MF Global - a company that suddenly declared bankruptcy without being able to account for something like 1.2 billion dollars of its customers' funds - would be given a one-way ticket to jail.

But this is not a fair and just world.  So corzine may well get a free pass on what he deserves.

Robert Kuttner, who co-founded The American Prospect, has a terrific analysis on how corzine can get away with it, which is well worth the few minutes it will take for you to read it.  Here, however, is an excerpt from his conclusions:

Last week, in a hearing before the Senate Agriculture Committee (which has partial jurisdiction over regulation of derivatives), it came out that while it is illegal to use customer money to cover margin calls for the firm's own proprietary bets, some other maneuvers that improperly put customer money at risk may not be illegal.

The fact is that all of these complex securities do not make the economy more efficient. They simply allow insiders to make highly lucrative bets putting other people's money at risk if they turn out to be wrong. And for all the self-congratulation after the Dodd-Frank Act was finally passed, Dodd-Frank does not touch Wall Street's deeper abuses or its toxic business model.

MF Global was "only" an $8-billion operation, so when it went bankrupt, it did not take down the entire financial system. But its activities were exactly the same kinds of highly leveraged gambling with ratios of 30 or even 50 to 1, beyond the reach of regulators or the comprehension of investors, that took down Lehman Brothers and the rest. Three years later, Wall Street can still play these kinds of games.

And this will continue until Bernie Madoff has lots of company.

Translation:  Wall Street is still a cesspool, Dodd-Frank is still a charade that does not protect people who need protection, and corzine is a vile scumbag who either cheated outright or played the dirty-but-technically-legal loopholes to screw his clients.

I'm sure Mr. corzine joins with Mr. Dodd and Mr. Frank in busting his buttons with pride.  And I am equally sure that this disgusting episode will get far less media play than it would have if corzine were a Republican.

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