Corzine Has Some ‘Splainin’ to Do

There once was a law named Glass-Steagel

Where government sniffed around like a beagle

Your money was protected

Until politics got connected

And now corruption is legal

The politically-controlled mainstream press and networks did a pretty good job of covering up the information released late on Friday afternoon regarding how former Senator and New Jersey Governor John Corzine may have had a serious memory lapse when he testified as Chairman of the now-bankrupt investment firm MF Global.

Actually when someone at that level is outed by a high-level inside employee as having personally ordered the transfer of $200 million in client account funds to cover speculative investments gone bad in the company account, this should be headline national news; particularly when he had just testified to congress that he “had no idea how the $200 million went unaccountable” only a short time ago.

The plot thickens as internal documents show that due diligence was being attempted by participants in the transaction to make sure that none of that money came from client accounts. Documents requiring such statements in writing may or may not have been properly prepared.  We will likely learn more this week as Mr. Corzine, one of the best known and largest dollar “bundlers” for the Democratic Party and the Obama campaign is recalled to an investigating committee to testify further regarding these issues.

For those who are not aware, one of this country’s most effective long-term pieces of legislation that forced the separation of funds in banking and speculation was the Glass-Steagel Act of 1933, a remedy to some of the wild financial practices on Wall Street and elsewhere. Kept on the books until November of 1999 it was designed to hold bankers and investment firm’s feet to the fire and avoid this very kind of misuse of good faith client funds for the whims and mistakes of those who gambled for big profits at high risk.

Though many want to forget the facts, it was a well-crafted deal by President Clinton, Treasury Secretary Robert Rubin and Citibank President Sanford Weil that drafted the bill to kill Glass-Steagel after much lobbying by Weil and K Street. Never to miss an opportunity, the Republican majority in Congress under some well-known names in leadership like Dick Armey jumped on the bandwagon and it ran through to presidential signature like a hot knife through butter. A few voices in congress on both sides of the aisle were easily silenced and the public was told that they would all participate in the merged banking and securities industries that would deliver double-digit returns and move us to a global economy where everyone would benefit.

Where we are today, in near global collapse, is the direct result of what was done that day in November 1999.

Mr. Corzine’s company has the right name “MF Global”. Some, like me, may think “MF: stands for “Manipulative Finance.”

But then, there could be another interpretation.

 

Jim Foster,

Editor

Publisher