National Commentary

A Corzine Con?

Jon Corzine – the former CEO of Goldman Sachs, former governor of and U.S. senator from New Jersey – took over leadership of MF Global and highly leveraged the company to complete bankruptcy. So for him to tell the United States House Committee on Agriculture during three hours of grilling that he didn’t know where the missing $1.2 billion in customer funds went seems ludicrous.

Is that the way big corporate executives do business? Would they ignore missing money that belonged to their customers and not ask questions?

Corzine admits he was stunned when he realized the loss.

“I simply don’t know where the money is,” Corzine told members of the House Agriculture Committee. He claimed to have learned of the shortfall of funds on Oct. 30.

Corzine kept his cool during the grilling, even when one senator said his mother told him “always do the right thing, even when nobody is looking.”

Corzine looked the part of an affluent businessman, wearing a black suit and a silk tie. He had been subpoenaed, and passed on using those Fifth Amendment rights that would have gotten him off the hook when he testified.

It is hard to believe that Corzine helped author the Sarbanes-Oxley Act that regulated the actions of corporate boards, and yet his own legislation could not protect the thousands of investors who lost $1.2 billion due to his mismanagement.

Section 302 of the Act requires the CEO and the CFO of companies to approve quarterly financial reports. How can Corzine testify that he doesn’t know where the money is? Did he review quarterly financial reports, or is he just lying? Shouldn’t he know what is required of a CEO – after all, he not only was the CEO of Goldman Sachs, but he was a member of the Banking and Budget committees as a senator.

Enron filed for bankruptcy on Dec. 2, 2001. It was so shocking at the time that “America’s Most Innovative Company” – according to Fortune magazine, under the watchful eye of Arthur Andersen, a premier accounting firm – could be so entangled in planned accounting fraud.

The collapse of Enron was the reason for the Sarbanes-Oxley Act, and yet over the past decade it appears Enron was the first domino to fall. After the Enron scandal, accounting fraud not only continued, but got worse.

The derivatives market took off. With no regulation, we ended 2008 with the bankruptcy of Lehman Brothers, Bank of America having to buy Merrill Lynch, the government paying $85 billion to bail AIG out of bankruptcy, and the purchase of Washington Mutual by J.P. Morgan Chase, in the biggest bank failure in history. So what exactly did we accomplish in terms of regulation?

Brooksley Born, during her tenure as chairperson of the Commodity Futures Trading Commission, tried to warn us in 1999 of the dangers of the unregulated derivatives market, and the Greenspan, Rubin and Summers dream team ran her out of town.

We are currently experiencing one of the tightest credit crunches in history. No one has recovered from the crash of 2008, except those who caused the crash in the first place. Wall Street seems to have recovered – they at least have access to money that no one else seems to have.

When are we going to wake up and do something to prevent these Wall Street crooks from taking all of our money? I am tired of bailing unregulated bankers out of bankruptcy with hard-earned tax payer dollars.

As I watch Corzine testify, I can’t help but wonder if Wall Street attracts gambling addicts. Corzine helped write the regulations and said all the right things publicly, and yet when he was in the driver’s seat he drove off the cliff. It’s as if he had no control – he couldn’t help himself.

At the end of the day, Corzine should have known better, and we should know better. Obviously we need regulation to control the gambling addicts we have running Wall Street.