Obama’s “Wall Street Guy” Lobbied Regulators For Rules That Pleased Him, Leaving MF Global Customers To Face The Consequences

OBAMA LAUDED JON CORZINE AS HIS “WALL STREET GUY” WHO HELPED CRAFT THE STIMULUS

Obama: Corzine Is “Our Wall Street Guy.” “The rollout also provided a showcase for Corzine, the former Goldman Sachs CEO whom Obama referred to as ‘our Wall Street guy’ at a meeting of Democratic governors in Chicago on Friday.” (Claire Heininger, “Corzine Profile Rises In Obama Camp,” The Star-Ledger (NJ),6/23/08)

Obama: Corzine “Was An Ally With The Obama Administration In Helping Us Develop A National Recovery Plan.” OBAMA: “Jon Corzine wasn’t just the first governor to pass an economic recovery plan for his state; he was an ally with the Obama administration in helping us develop a national recovery plan.” (President Obama, Remarks By The President At New Jersey Rally For Governor Jon Corzine, Holmdel, NJ, 7/16/09)

• Watch Obama’s Comments Here 

Vice President Biden: “Jon Corzine Helped Craft The Recovery Act.” BIDEN: “It’s not coincidental that that’s what the Recovery Act is. Jon Corzine helped craft the Recovery Act. It’s not coincidental that the things he did here turned out to be the exact same things the recovery act has because way back in the transition period before we were sworn in, when Barack Obama and I were literally sitting at a desk in a high rise in Chicago beginning to plan how we would try to get this economy out of a ditch, literally the first guy I called was Jon Corzine. Not a joke. Not a joke. Because first of all, he’s the smartest guy I know in terms of the economy and on finance.” (Vice President Joe Biden, Remarks, NJ, 5/7/11)

• Watch Biden Say That Corzine “Helped Craft” The Stimulus

In The Early Days Of The Obama Administration, Biden “Literally” Called Jon Corzine For Advice On The Economy Because “He Knew About The Economy … And We Trusted His Judgment.” “‘I literally picked up the phone and called Jon Corzine and said Jon, what do you think we should do,’ Biden said. ‘The reason we called Jon is that we knew that he knew about the economy, about world markets, how we had to respond, unlike almost anyone we knew. It was because he had been in the pit — because he had been in the furnace. And we trusted his judgment.’” (Conor Friedersdorf, “Obama’s Team Relied On Jon Corzine For Economic Advice,” The Atlantic, 11/14/11)

• Watch Biden Say The Obama Team Relied On Corzine For Economic Advice 

Corzine Was The Obama Campaign’s Wall Street Liaison

Corzine Played A “Central Role” In Obama’s Wall Street Fundraising Efforts. “His new legal troubles, sparked by the bankruptcy filing of his investment firm, MF Global, could complicate the president’s efforts to raise money from the financial community given Corzine’s central role in those efforts.” (Michael Isikoff, “Corzine, Top Obama Fundraiser, Under FBI Investigation,” MSNBC, 11/2/11)

Corzine Bundled Over $500,000 For Obama’s Reelection Campaign. (Center For Responsive Politics, Open Secrets, Accessed 5/22/12)

• The Obama Campaign Has Not Returned The Bundled Money. “Corzine was one of 41 donors who bundled more than $500,000 this year for Obama’s re-election effort, according to documents released by the campaign Oct. 14. The campaign doesn’t plan to return those bundled donations and will evaluate other contributions from MF Global employees on a case-by-case basis, according to the Democratic official.” (Hans Nichols, “Obama Returns $70,000 In Corzine Donations,” Bloomberg, 12/23/11)

 CORZINE PERSONALLY LOBBIED REGULATORS SO HE COULD CONTINUE HIS RISKY BETS AT MF GLOBAL

 Click To Watch  

While At MF Global, Corzine Borrowed Money From Other Accounts To Fund Firm Trading, A Practice Known As “Internal Repo.” “At MF Global, his strategy was simple: ‘We are transforming from sort of an old-like brokerage firm into an investment bank’ Corzine told CNBC’s Maria Bartiromo. Key to his plan was a massive bet on European government bonds – a bet that would swell to more than $6 billion, and ultimately lead to MF Global’s collapse. Corzine’s bet could not have occurred without a finance strategy known as ‘internal repo.’ In essence, MF Global was borrowing money from customer accounts and using it to fund trading in another part of the firm. During the summer of 2011, however, just months before MF Global filed for bankruptcy, internal repo was a strategy regulators were hoping to do away with.” (Jason Breslow, “How Corzine Steered Regulators To Protect Fatal MF Global Bet,” PBS, 5/22/12)

In The Summer Of 2011, When Corzine Learned The CFTC Was Considering Banning Internal Repo, He Began To Lobby The Commission In Washington. NARRATOR: “But Corzine was using a financial strategy called internal repo, whereby a brokerage can borrow cash internally from another part of the firm. In Washington, in the summer of 2011, regulators at the Commodity Futures Trading Commission, the CFTC, were debating whether to ban internal repo transactions.” THE NEW YORK TIMES’ AZAM AHMED: “The CFTC was potentially going to say, ‘No more doing internal repo.’ And for a lot of companies, it was an important way to finance certain operational needs. Corzine, you know, got wind of this, so he begins to lobby in Washington.” (PBS’ “Six Billion Dollar Bet,” 5/22/12)

• Corzine Met With CFTC Officials Three Times To Lobby For Internal Repo. “As shown in the above excerpt from tonight’s film Six Billion Dollar Bet, internal repo transactions were so important to Corzine that he met with officials at the Commodities Future Trading Commission (CFTC) on three occasions to lobby for their preservation.” (Jason Breslow, “How Corzine Steered Regulators To Protect Fatal MF Global Bet,” PBS, 5/22/12)

CFTC Commissioner Bart Chilton: “Senator Corzine Was One Of The More Prominent Individuals Who Came In And Told Us What A Drastic Mistake It Would Be To Curtail The Use Of These Internal Repurchasing Agreements.” CFTC COMMISSIONER BART CHILTON: “Senator Corzine was one of the more prominent individuals who came in and told us what a drastic mistake it would be to curtail the use of these internal repurchasing agreements and that they were doing everything appropriate with regard to these internal repos, and that we shouldn’t worry about them and we shouldn’t touch them.” NARRATOR: “Corzine visited the CFTC and met with commissioners on three different occasions. CHILTON: “He’s an impressive man, and he made a good case, and when he told me that we were making a big mistake. It certainly put some doubt into my mind for a little bit there as to whether or not we were going down the right course, but certainly somebody that had his stature was somebody who had, you know, added respect, in my view.” (PBS’ “Six Billion Dollar Bet,” 5/22/12)

Institutional Risk Analytics’ Chris Whalen: “When Somebody Can Show Up And Just Wave Their Hand… What’s The Point? We Might As Well Not Have The Regulator.” NARRATOR: “The regulators backed off. Internal repos were not banned.” CHRIS WHALEN: “When somebody can show up and just wave their hand and say that they’re the former governor of New Jersey and they worked for Goldman Sachs, and then show up and start lobbying the agency for even more leniency, I mean, what’s the point? We might as well not have the regulator.” (PBS’ “Six Billion Dollar Bet,” 5/22/12)

WHILE CORZINE WON WITH REGULATORS, CUSTOMERS LOST OUT ON BILLIONS OF DOLLARS

“By Mid-2011, With A Pass From Regulators, Corzine’s Bet On European Sovereign Debt Rose From $1.5 Billion To $4 Billion To Over $6 Billion. Finally It Was All Too Much.” (PBS’ “Six Billion Dollar Bet,” 5/22/12)

After MF Global’s Collapse, $1.6 Billion Went Missing From Customer Accounts. “The MF Global Missing Money Caper continues. Earlier this week, MF Global’s trustee provided an update on several things but not the missing money. Turns out he just needed a few more days so the world could get ready to hear this: There’s another $400 million now included in the official figure. (Insert Law & Order sound effect here.) Colleague Jacob Bunge is reporting that the new estimate for the deficiency in customer accounts is $1.6 billion.” (David Benoit, “MF Global Missing $1.6 Billion, counting U.K.,” The Wall Street Journal’s “Deal Journal,” 2/10/12)

• The $1.6 Billion Missing Customer Money Has Been Traced, Though It Is Still Unclear How Much Will Be Returned And Who Will Be Held Responsible. “Investigators probing the collapse of bankrupt brokerage MF Global said Tuesday that they have located the $1.6 billion in customer money that had gone missing from the firm. But just how much of those funds can be returned to the firm’s clients, and who will be held responsible for their misappropriation, remains to be seen.” (James O’Toole, “$1.6 Billion In Missing MF Global Funds Traced,” CNN Money, 4/24/12)

MF Global Customers Who Traded On Foreign Exchanges Are Still Missing Nearly All Their Money. “So far, most of MF Global’s thousands of former customers have recovered about 70% of their money, while those that traded on foreign exchanges are missing nearly all of it.” (James O’Toole, “$1.6 Billion In Missing MF Global Funds Traced,” CNN Money, 4/24/12)

MF Global Customers Across The Country Have Been Hurt By Corzine’s Risky Bets

 “The Havoc Wreaked” By The Failure Of Jon Corzine’s MF Global Is Rippling Through The Farm Belt. “The havoc wreaked by MF Global’s bankruptcy filing has been felt not just by Wall Street investors and traders, but also by wheat and corn growers, cattle ranchers and pig farmers. Dotting the farm belt, many who used the commodities market to protect against price swings are finding their money locked up and their hedges unwound due to the firm’s downfall.” (Jerry A Dicolo And Dan Strumpf, “MF Global Collapse Felt In Farm Country,” The Wall Street Journal, 12/7/11)

• Farmers, Ranchers And Rural Businesses Were The Hardest Hit By MF Global’s Failure And The Investigations Following The Bankruptcy. “Farmers, ranchers and rural businesses such as grain elevators and feed mills were among the hardest hit when they were cut off from the cash in their hedging accounts at MF Global, which sought bankruptcy protection in October after making a disastrous bet on European government debt. The number of people harmed and the extent of their losses isn’t clear yet.” (Steve Karnowski, “Shock Waves From MF Global Collapse Felt On Farms,” The Associated Press, 12/4/11)

More Than 100 Minnesota Farmers Had Their Money Frozen Due To MF Global’s Collapse. “Magnuson is among more than 100 Minnesota farmers estimated to have assets frozen as a result of MF Global’s bankruptcy filing and an estimated $1.2 billion in missing customer funds.” (Jim Spencer, “MF Global Woes Ripple Into Heartland,” Star Tribune, 12/1/11)

Over 100 Iowans Were Left Waiting For Their Money. “Ries, whose family still operates farms in the area, said he sent a letter to more than 100 aggrieved clients who have been waiting for their money since MF Global filed for bankruptcy.” (Lauren Tara Lacapra, “Iowa Farmers Feel Ripples Of MF Global Bankruptcy,” Reuters,11/4/11)

Hundreds Of Hog Producers In Minnesota And Wisconsin May Have Lost Over $40 Million. “Hog producers who rode out tough years in 2008 and 2009 came to rely heavily on risk management tools and were starting to lock in some pretty good profits before MF Global collapsed, said Mark Greenwood, a senior vice president and swine expert at AgStar Financial Services, which serves farmers mainly in Minnesota and Wisconsin. Greenwood estimates that about half of the hog producers his company serves have been affected, with combined losses probably more than $40 million. The 300 to 400 clients have individual losses of $50,000 to over $1 million, he said.” (Steve Karnowski, “Shock Waves From MF Global Collapse Felt On Farms,” The Associated Press, 12/4/11)

New Jersey Resources Has Lost $20.2 Million From Its MF Global Account. “A subsidiary of Wall-based New Jersey Resources is trying to collect $20.2 million from its account at MF Global, the failed New York trading firm once headed by former New Jersey Gov. Jon Corzine. NJR Energy Services, an unregulated, wholesale energy subsidiary, doesn’t know how much money it will get back after the Wall Street firm imploded in scandal, leading to Corzine’s resignation as chief executive officer.” (David P. Willis, “MF Global Owes Wall Company $20.2 Million,” Asbury Park Press, 3/28/12)