# Jon Corzine is being framed by the media and Congress **URL:** \ **Category:** Great Debates\ **Created:** [December 8, 2011, 8:36pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556 "2011-12-08T20:36:16Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Trom](https://avatars.discourse-cdn.com/v4/letter/t/958977/32.png) [@Trom](https://boards.straightdope.com/u/Trom)\ **Post date:** [December 9, 2011, 5:07pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/21 "2011-12-09T17:07:35Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Sure, but the fact that the money isn’t there doesn’t mean there was fraud (though it’s presumably the most likely explanation). OK. Fraud has a specific legal meaning, which hasn’t been proven yet in court. How about “screwed over their entire customer base, cast doubt on the stability of the entire futures market, and hamstrung innocent farmers.” [Farm belt rage over MF Global could chill markets](http://www.reuters.com/article/2011/11/22/us-mfglobal-futures-idUSTRE7AL06I20111122?feedType=RSS&feedName=topNews&rpc=22&sp=true) > [@](#): > > “I would be hedging some feeder cattle right now, but I’m not going to do it. I’m leaving them exposed to the cash market and I don’t like that,” Rietzke said. > > Rietzke may reside far from the trading pit in Chicago, but he and thousands of other ranchers and farmers across the country are at the heart of futures trading. > > With billions of their dollars locked up by MF Global’s October 31 bankruptcy filing, they are a key voice in determining if and when the futures business regains its poise and reputation. > > “I have no confidence in the market, because it could happen at any other brokerage,” Rietzke told Reuters from his 8,000 acre ranch near the southwest Kansas town of Coldwater. > > Dozens of other market participants, most of them smaller introducing brokers or independent traders, say the painful lesson of MF Global is forcing them to reconsider a livelihood in the market and how they hedge future crops and livestock. > … > Take, for example, the plight of Andy Belshan, who runs a grain elevator business in Albert Lea, a town of 18,000 in southern Minnesota. Belshan buys corn and soybeans from about 75 local farmers for further resale on the market. > > By entering into future-delivery contracts with farms, elevators like Belshan’s provide a crucial hedging service to small farmers throughout rural America. Belshan then hedged his own risks through MF Global, run by former Goldman Sachs & Co Inc chief and New Jersey governor Jon Corzine before its bankruptcy. > > After the bankruptcy filing, Belshan’s positions were transferred to another broker. But his accounts are still short a significant amount, he says. > > “The customer funds we had for a hedge position, that’s the bedrock that the system is supposed to be built upon,” said. “Somebody dropped the ball and let those funds go somewhere. If something doesn’t get fixed, it will have a ripple effect” in the rural economy. ---
**Author:** ![CJJ](https://avatars.discourse-cdn.com/v4/letter/c/ecc23a/32.png) [@CJJ](https://boards.straightdope.com/u/CJJ)\ **Post date:** [December 9, 2011, 5:23pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/22 "2011-12-09T17:23:11Z")
> [@Fotheringay-Phipps](#): > > From what I’ve read, Corzine’s bets on European debt were fundamentally good ones, but they brought down the firm anyway simply because creditors lost confidence and called in their debt. That doesn’t get him completely off the hook for the collapse, because that’s part of the job, but that part of the job is harder to predict. (I understand that this is separate from the issue of the comingled funds.) Let’s be clear: Corzine’s bets on European debt amounted to ~$6 billion, roughly 5 times MFG’s total equity. This was a direct result of Corzine’s strategy to [dramatically increase proprietary trading with the firm’s own capital](http://dealbook.nytimes.com/2011/10/26/europes-debt-threatens-mf-global-and-corzine/): > [@](#): > > The firm’s woes pose a huge test for Mr. Corzine, who joined it only last year with a grand vision: to remake the four-year-old brokerage into a smaller version of his former employer, Goldman Sachs. One of Mr. Corzine’s big initiatives at MF Global was to make more trades using the firm’s own capital, a potentially more lucrative business than simply trading for clients. But regulators and analysts said that so-called principal trading bore high risks and required the firm to hold more capital. Corzine was [personally warned](http://www.cnbc.com/id/45564776) about this exposure by people within his own company, and court papers filed at the bankruptcy by MFG state that this proprietary trading was responsible for much of MF Global’s massive 3rd-quarter loss. Hindsight is 20-20 of course, but it’s fairly easy to argue that his decisions led directly to the collapse of his firm. And besides the obvious outrage over comingled funds, I also suspect that there’s some piling on here because MFG was essentially hoping for a quick bailout of bankers holding sovereign debt at a time when the public is wondering why they keep having to shovel money directly to the banks–why can’t bankers feel some of the pain in this crisis? It’s probably not fair to punish him for being on the wrong side of public opinion, but I don’t doubt that’s a part of it. ---
**Author:** ![Bill\_Door](https://avatars.discourse-cdn.com/v4/letter/b/50afbb/32.png) [@Bill\_Door](https://boards.straightdope.com/u/Bill_Door)\ **Post date:** [December 9, 2011, 5:33pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/23 "2011-12-09T17:33:14Z")
> [@Linden\_Arden](#): > > (snip)SarBox says he must KNOWINGLY sign deceptive statements though. History indicates financial reporting at MF was deplorable. I’d like a little more detail about what knowingly means in this case. For example, if there’s a law that it is illegal to knowingly discharge waste containing greater than 10 ppb hexavalent chrome, I can’t evade the law by simply not testing the waste and flush it down the toilet. In this case knowingly applies to the act of discharging and not to the chrome concentration. I have a duty to know what the concentration is, and being ignorant won’t help in court. If Jon Corzine has a fiduciary responsibility to know certain things, does the fact that he doesn’t help him at all in court? ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [December 9, 2011, 5:36pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/24 "2011-12-09T17:36:25Z")
> [@Trom](#): > > OK. Fraud has a specific legal meaning, which hasn’t been proven yet in court. > > How about “screwed over their entire customer base, cast doubt on the stability of the entire futures market, and hamstrung innocent farmers.” Okay, I’ll give you that one. > [@Bill\_Door](#): > > If Jon Corzine has a fiduciary responsibility to know certain things, does the fact that he doesn’t help him at all in court? In a criminal case, it most likely does. In a civil case (say, a shareholder suit), probably not. ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [December 9, 2011, 5:57pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/25 "2011-12-09T17:57:36Z")
MF Global’s primary business was brokerage, but they also traded on their own account. They made a bet on the bonds of some of the PIIGS, buying them at a discount. The bet was that Europe would come to some kind of resolution (likely a temporary kicking-of-the-can) and the bonds would pay off at maturity. Problem is, they had to borrow lots of money from counterparties to maintain their position, and the position was marked-to-market, meaning if the value of the bonds declined too much then MF Global would have to pony up more funds as collateral to maintain their position (otherwise, the counterparties would force them to sell the bonds before maturity and take a haircut). To keep the bet going, MF Global raided the accounts of their brokerage customers, and the money is still missing. As SarbOx requires Corzine to certify that the company’s internal controls are up to snuff, his claims of ignorance and of some random employee accidentally misusing customer funds don’t really help him. ---
**Author:** ![Nobody](https://avatars.discourse-cdn.com/v4/letter/n/94ad74/32.png) [@Nobody](https://boards.straightdope.com/u/Nobody)\ **Post date:** [December 10, 2011, 1:39am UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/26 "2011-12-10T01:39:48Z")
I just hear about this on the radio a few days ago, in fact, [here’s the transcript](http://www.npr.org/2011/12/06/143224370/corzine-reportedly-ignored-warnings-about-euro-bonds). From this particular story Corzine, and the board of directors for that matter, don’t come out looking too good. > [@NPR](#): > > According to the journal, MF Global’s chief risk officer warned Corzine personally about the dangers of investing in the bonds of Italy, Portugal, Ireland and other troubled eurozone countries, but Corzine threatened to quit if the company’s board did not support his position. On Michael Roseman, the company’s Chief Risk Officer > [@NPR](#): > > NEARY: But why weren’t Roseman’s warnings taken more seriously by the board? > > STEINBERG: I think with Jon Corzine in place, it becomes very easy to be seduced by what the company could have been, and I think when you’re a director on that board, it becomes easy to say, all right, we trust him. He (unintelligible) Goldman Sachs. He was the governor of New Jersey. He’s got this great track record. Let’s let him guide us. So Roseman, after airing his concerns for about six months, he was told by the company that he was being replaced. > … > NEARY: And the new risk officer presumably supported the position that Jon Corzine had taken on the risks involved. > > STEINBERG: That’s interesting. At first, he seemed to, but then, ultimately, my sources tell me that he also had concerns about the risk and actually aired them to the board. So a risk officer gets replaced with a yes man, who then gets concerned himself, but Corzine ignores both risk officers and keeps on course running the company into the ground, with the board’s blessing it appears. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [December 10, 2011, 2:45am UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/27 "2011-12-10T02:45:37Z")
Corzine bet big with his company and leveraged capital. He was also long and wrong as they say in the business. He’s not being framed, he is guilty as all get out for trying to take a low margin and relatively low risk business and turn it into a high margin high risk business. Proprietary trading is the highest risk major business on Wall Street. Corzine bet it all on black 20 and lost. How is this a frame up? OP come back and 'splain please. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [December 10, 2011, 4:35am UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/28 "2011-12-10T04:35:26Z")
We need to make our financial culture boring. Like it’s supposed to be, full of cautious and dull white guys. Guys with no desire whatsover to be lion-tamers. Guys who’s job description is about finding secure and solid investments with modest but reliabie returns. That is, investments, money you park somewhere and leave it there. Regulate the living hell out of it, stamp out the last vestige of creativity. We’ve had quite enough excitement for a while. A nice stretch of exceedingly dull would be soothing for our national nerves. ---
**Author:** ![Absolute](https://avatars.discourse-cdn.com/v4/letter/a/b2d939/32.png) [@Absolute](https://boards.straightdope.com/u/Absolute)\ **Post date:** [December 10, 2011, 6:40am UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/29 "2011-12-10T06:40:02Z")
A major Wall Street firm goes bankrupt, they are literally missing $1,200,000,000 in _customer_ funds (which, it appears, may have been stolen to attempt to cover up the firm’s losses), and you’re trying to come up with excuses for why the CEO of 18 months, a former CEO of Goldman Sachs and Wall Street insider, is not responsible? What kind of bizarro world have I just been teleported into? Oh, he’s a Democrat. Never mind. Talk about a double standard. If Corzine were anyone else people would be calling for his head on a stick. ---
**Author:** ![Zoe](https://avatars.discourse-cdn.com/v4/letter/z/a4c791/32.png) [@Zoe](https://boards.straightdope.com/u/Zoe)\ **Post date:** [December 10, 2011, 6:54am UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/30 "2011-12-10T06:54:48Z")
Who is looking at party affiliation? ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [December 10, 2011, 11:05am UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/31 "2011-12-10T11:05:07Z")
I had the same reaction as Absolute, I’ll admit. I think most people from either party will waste no time making excuses for him. But those who do–I am speculating–are protecting a Dem because they simply can’t resist. This circumstance is so egregiously bad, to describe it as a frame-up defies any sort of rational explanation. Again, I offer this just in reaction to Absolute’s post and as testament to my character flaws in assuming such awful things. I am very ashamed. 🙂 ---
**Author:** ![What\_the](https://avatars.discourse-cdn.com/v4/letter/w/f4b2a3/32.png) [@What\_the](https://boards.straightdope.com/u/What_the)\ **Post date:** [December 10, 2011, 1:57pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/32 "2011-12-10T13:57:52Z")
> [@Zoe](#): > > Who is looking at party affiliation? Don’t we all? ---
**Author:** ![Linden\_Arden](https://avatars.discourse-cdn.com/v4/letter/l/53a042/32.png) [@Linden\_Arden](https://boards.straightdope.com/u/Linden_Arden)\ **Post date:** [December 10, 2011, 5:06pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/33 "2011-12-10T17:06:03Z")
> [@China\_Guy](#): > > Corzine bet big with his company and leveraged capital. He was also long and wrong as they say in the business. He’s not being framed, he is guilty as all get out for trying to take a low margin and relatively low risk business and turn it into a high margin high risk business. Proprietary trading is the highest risk major business on Wall Street. > > Corzine bet it all on black 20 and lost. How is this a frame up? OP come back and 'splain please. I acknowledge that Corzine ran the firm into the ground. But how many CEO’s get hauled in front of Congress for doing so? CIT Group took TARP money and shortly after filed chapter 11. No one at that financial company was investigated by Congress. Every penny of that public money was lost. So I agree with you that he is guilty - of poor business business judgment as you note. He should lose his securities license as well (for the co-mingling) As for the politics involved its obvious. He is a political figure and a fundraiser. But he did not “steal” a billion dollars like is being implied by some political enemies. ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [December 10, 2011, 5:08pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/34 "2011-12-10T17:08:54Z")
So you think he should get a slap on the wrist for being the head-honcho of a firm that straight-up stole customers’ money. Why? ---
**Author:** ![Linden\_Arden](https://avatars.discourse-cdn.com/v4/letter/l/53a042/32.png) [@Linden\_Arden](https://boards.straightdope.com/u/Linden_Arden)\ **Post date:** [December 10, 2011, 5:20pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/35 "2011-12-10T17:20:58Z")
> [@MOIDALIZE](#): > > So you think he should get a slap on the wrist for being the head-honcho of a firm that straight-up stole customers’ money. Why? When its discovered Who and When the comingling took place appropriate penalties should apply. If Corzine knowingly signed false financial statements then Sarbanes-Oxley should apply (which is highly unlikely given the company’s history). ---
**Author:** ![Linden\_Arden](https://avatars.discourse-cdn.com/v4/letter/l/53a042/32.png) [@Linden\_Arden](https://boards.straightdope.com/u/Linden_Arden)\ **Post date:** [December 10, 2011, 5:27pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/36 "2011-12-10T17:27:37Z")
And to make matters seem worse to some, George Soros bought the $6.3 billion of Euro bonds for $2 billion. The trustee should use those proceeds to make the clients of MF whole. They should stand in front of the secured creditors of MF. ---
**Author:** ![MOIDALIZE](https://avatars.discourse-cdn.com/v4/letter/m/e274bd/32.png) [@MOIDALIZE](https://boards.straightdope.com/u/MOIDALIZE)\ **Post date:** [December 10, 2011, 5:34pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/37 "2011-12-10T17:34:21Z")
> [@Linden\_Arden](#): > > And to make matters seem worse to some, George Soros bought the $6.3 billion of Euro bonds for $2 billion. > > The trustee should use those proceeds to make the clients of MF whole. They should stand in front of the secured creditors of MF. I agree. But the fact that the clients can potentially be made whole doesn’t excuse the fact that their money was put at risk to cover a bet that MF Global made to profit for themselves. And Corzine was the one who felt that MFG should be making prop trades to try and pad their bottom line. So I still don’t see why you think Corzine should just skate off without at least having to face some heat. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [December 11, 2011, 1:20am UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/38 "2011-12-11T01:20:09Z")
> [@Linden\_Arden](#): > > And to make matters seem worse to some, George Soros bought the $6.3 billion of Euro bonds for $2 billion.. Please explain what you are talking about? Soros bought Euro6.3billion face value bonds for USD2billion? What would be wrong with that, pray tell? ---
**Author:** ![ralph124c](https://avatars.discourse-cdn.com/v4/letter/r/8797f3/32.png) [@ralph124c](https://boards.straightdope.com/u/ralph124c)\ **Post date:** [December 11, 2011, 1:48pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/39 "2011-12-11T13:48:13Z")
> [@China\_Guy](#): > > Please explain what you are talking about? Soros bought Euro6.3billion face value bonds for USD2billion? What would be wrong with that, pray tell? You are absolutely right-the fact that Soros was able to buy these bonds at such a tremendous discount, means that the bonds are absolutely “junk”-there is a substantial chance that they might be worthless. Say what you will about Soros-but he is taking an enormous risk. If it pays off, he he makes a killing-but if not, he loses his entire investment. ---
**Author:** ![Linden\_Arden](https://avatars.discourse-cdn.com/v4/letter/l/53a042/32.png) [@Linden\_Arden](https://boards.straightdope.com/u/Linden_Arden)\ **Post date:** [December 11, 2011, 3:40pm UTC](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556/40 "2011-12-11T15:40:14Z")
> [@ralph124c](#): > > You are absolutely right-the fact that Soros was able to buy these bonds at such a tremendous discount, means that the bonds are absolutely “junk”-there is a substantial chance that they might be worthless. > Say what you will about Soros-but he is taking an enormous risk. If it pays off, he he makes a killing-but if not, he loses his entire investment. Soros spends $2 billion on $6.3 billion of junk - then buys CDS to protect the bonds (maybe 15% of face on a 1 yr maturities) and he makes a healthy $3 billion. Is it risk free? No, of course not. Anyway - my point was that the combo of Soros, Corzine, and Obama will set the conspiracy theorists into hyper-drive. [Previous page](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556.md?page=1) [Next page](https://boards.straightdope.com/t/jon-corzine-is-being-framed-by-the-media-and-congress/605556.md?page=3)