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The Collapse of MF Global

Discussion in 'Sports and News' started by YankeeFan, Nov 3, 2011.

  1. YankeeFan

    YankeeFan Well-Known Member

    While they're not a household name, MF Global was a big player on Wall St., especially in commodities and futures.

    New CEO, Jon Corzine, tried to expand the firm's business into other areas and become a traditional investment bank, along the lines of his old firm, Goldman Sachs.

    Well, they ended up with some toxic assets, and it was a disaster. The way they handles it looks like it may be criminal:

    Interestingly, MF Global took over the futures business of REFCO -- my long ago employer -- when they collapsed, as a result of fraud shortly after going public.

    So, for some of their employees, this is a real case of deja vu.
  2. Bob Cook

    Bob Cook Active Member

    I don't know what MF stood for before, but I have a good idea what clients think MF stands for now.
  3. The Big Ragu

    The Big Ragu Moderator Staff Member

    They tapped client cash and hid the activity. Nuff said. People will try to conflate it with Wall Street in general, but that is criminal. It's no different than any kind of theft or fraud.

    Also, they were at about a 40 to 1 leverage ratio, which I personally have no problem with. If they want to throw risk management out the window and inevitably destroy their business, that should be their problem. They don't deserve to exist. But we do supposedly have a securities and exchange commission "regulating" that.

    I suspect when your lead guy is Jon Corzine, who walked through the revolving door, you don't get scrutinized, for fear of pissing off a guy who can get you fired with a phone call. This is why they barely looked at Bernie Madoff for all those years, even when there were serious warning signs

    Lastly, it was interesting yesterday watching Ben Bernanke talk his way around MF Global, saying the Fed is not its regulator, the SEC is. Just 8 months ago, though, the Fed added MF Global to its list of 22 primary bank dealers. This was the firm the Fed felt stable enough to conduct its monetary policy through (which is the thing that screws American most, and doesn't get talked about). It's not surprising, though. The Fed is conducting these giant bond transaction as it runs on its little hampster wheel, to try to inject more and more money into our system (which is destroying the dollar and making things worse), and it needs more and more primary dealers to unload all of that debt. So I am sure their screening process just looks at assets, and no one actually bothers to check out the balance sheets of the companies they choose to work with. Look how that worked.
  4. LongTimeListener

    LongTimeListener Well-Known Member

    For me this is what OWS is, or could be, about: regulation and true enforcement of the existing penalties. There are all sorts of examples of the SEC lying down for the corporate titans -- they had eight years after first notification in which they could have caught Madoff. And there could and should be thorough investigations of everything the banks were doing and when they knew their CDOs and default swaps were going to go bad, because there is a whole lot of smoke around that issue but nobody looking for a fire. Particular to this case, it would be prudent to walk back Jon Corzine's career and see where else he might have practiced this numbers-fudging, and whether the practices he was part of continue today, and that would take the investigators straight inside the gates of Goldman Sachs.

    I am going to assume they won't do that.
  5. YankeeFan

    YankeeFan Well-Known Member

    But it's not at all what OWS is about.

    They want to change the entire system. They blame the entire banking industry for their problems.

    And, setting OWS aside, COngress always reacts to these kinds of things with "sweeping" new legislation designed to stop the problem, but that inevitably leads to new problems.

    We have the laws on the books. We have regulators in place. They just need to do their job, whether in the Madoff case or in the MF Global case.

    Instead, thanks to the revolving door between Wall St. & Washington, we have a regulator unwilling to investigathis friend and mentor:

  6. Azrael

    Azrael Well-Known Member

    Which is exactly what OWS was founded to protest.


    . . .we demand that Barack Obama ordain a Presidential Commission tasked with ending the influence money has over our representatives in Washington. It's time for DEMOCRACY NOT CORPORATOCRACY, we're doomed without it.

    - July 13, 2011
  7. LongTimeListener

    LongTimeListener Well-Known Member

    Yf -- that is exactly what I'm referencing, the fact that regulators won't investigate these matters. That is very much what OWS is about, at least the parts of it that are coherent enough to be about something.
  8. terrier

    terrier Well-Known Member

    Okay, what expensive piece of weaponry will be found in Corzine's mouth before Christmas?
  9. Ben_Hecht

    Ben_Hecht Active Member

    . . . but . . . but . . . he has to finish writing "My Life As A Douche", first.
  10. The Big Ragu

    The Big Ragu Moderator Staff Member

    "Mr. Corzine, who has not been accused of any wrongdoing, is said to have hired Andrew F. Levander, a prominent criminal defense lawyer. Mr. Levander, the chairman of Dechert, has represented other Wall Street executives including John Thain, the former chief executive of Merrill Lynch. Mr. Corzine has also retained two bankruptcy lawyers from the firm Perkins Coie, Alan D. Smith and Schuyler G. Carroll, to represent him in the civil Chapter 11 proceedings."
  11. Ben_Hecht

    Ben_Hecht Active Member

    Jon Corzine . . . the man who made Chris Christie possible.
  12. Baron Scicluna

    Baron Scicluna Well-Known Member

    Herman Cain's balls?
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