- Wall Street's business model is grand theft. Jon Corzine
was MF Global's CEO. Earlier he headed Goldman Sachs, America's premiere
- He also was one of legions of corrupt politicians as
US senator and New Jersey governor. His extreme, longstanding criminality
warrants putting him in prison for life. No restitution can reverse his
harm. It's true also for many others like him.
- Before its collapse, MF Global (MFG) faced a run on its
holdings. On October 31, it filed for Chapter 11 bankruptcy protection.
- On November 19, Reuters said the firm "moved hundreds
of millions of dollars in customer money from its US brokerage unit to
Bank of New York Mellon Corp. in August, just months before filing for
- In other words, MFG lawlessly looted customer accounts.
It used client money for its own purposes to speculate, as well as cover
debt obligations and losses. At issue is grand theft.
- In fact, it's one of the most brazen acts in memory in
a business notorious for outrageous criminality. What ever's gotten away
with incentivizes Wall Street crooks to steal more. Why not! At most, they're
slap on the wrist punishments mock rule of law justice.
- On November 19 on the Kaiser Report, Barry Ritholtz commented
on the big lie, hyper-leveraged banks, the MFG scandal, and congressional
political whores, saying:
- People responsible for creating these problems shift
blame to others. Facts say otherwise. Wall Street speculators take big
risks. They use hyper-leverage that's only effective when it works.
- "Their models were wildly optimistic. Banking is
supposed to be very boring." Decisions are supposed to be made about
who's credit worthy and who isn't. Instead, reckless speculation replaced
investing and sound lending policies.
- Wall Street's ideology is bankrupt, "and it's causing
global damage to the economy. For investment banks, the five biggest houses
got waivers on leverage rules."
- SEC collaborators rigged the system for them. These banks
also "happen to be the five biggest donors to Congress," or among
the largest. Over time, successful lobbying removed everything affecting
profits, no matter the risk. The SEC, Fed, FDIC and CME rigged the system
- Brazen fraud became standard practice. Criminals deserving
prison keep stealing. The dirty game involves grabbing "whatever the
hell you want and run for the hills. No one will prosecute you."
- "MF Global is another order of magnitude. If anyone
is going to jail over this whole period, it has to be" their top officials.
Don't bet on it, especially a power broker like Corzine.
- He's directly responsible for stealing $1.2 billion in
client funds. He looted them brazenly. According to Bloomberg:
- "Examiners from CME Group Inc., the world's largest
futures exchange, found unexplained wire transfers" and $1.2 billion
missing "during the weekend the failing broker was talking with possible
buyers, a person briefed on the matter said."
- Multiple investigations began, including by Justice Department
lawyers. The Commodity Futures Trading Commission (CFTC) and Chicago Mercantile
Exchange (CME) were responsible for overseeing MFG. They knew what went
on but did nothing.
- Huffington Post writer Daniel Dicker said the Koch Brothers
were tipped off in time to get out safely. Others weren't as lucky.
- MFG is America's eighth largest bankruptcy, the first
major one the Eurozone crisis caused. Expect more ahead.
- Practices cratering economies in 2008 continue. Nations
teeter on bankruptcy. Corzine bet heavily that Spanish and Italian debt
- Using 40 to 1 leverage, he bet massively the wrong way.
His second quarter $190 million loss drove investors away. Those remaining
lost everything. Corzine and top executives pocketed millions.
- In 1999, he was worth an estimated $400 million when
he left Goldman Sachs. Perhaps its double that now, including funds looted
from MFG. We may know more later on.
- From 1994 - 1994, Corzine headed Goldman Sachs during
the time banking became deregulated. Carter began it late in his tenure.
Reagan did much more. Clinton completed unfinished business. James Petras
calls the 1990s "the golden age of pillage," the decade of anything
- It persists in the new millennium because political Washington
and regulators look the other way, profiting handsomely by doing it. Everyone
feathers nests belonging to others. Self-sustaining corruption continues.
Only little people and unknowing investors get scammed. Power brokers make
out like bandits.
- After losing his 2009 gubernatorial reelection bid, government
regulators welcomed Corzine back on Wall Street. New York Fed president
William Dudley (a fellow Goldman alumnus) made MFG a "primary dealer."
Despite its size and a former trading scandal $10 million fine, it became
one of a handful of firms marketing US Treasuries.
- At the behest of Corzine and other power brokers, CFTC
head Gary Gensler suspended implementation of new rules imposing limits
on broker-dealer use of client funds, especially for foreign sovereign
debt. In other words, they were freed to commit grand theft. MFG took full
- Wall Street Journal Money & Investing editor Francesco
Guerrera wrote about "Three Lessons From the Collapse." He quoted
University of San Diego Professor Frank Partnoy, saying:
- MFG's "failure illustrates how much financial markets
are about trust and confidence. Once you lose those, you are done."
- Guerrera's three lessons include:
- closing accounting loopholes and strengthening oversight;
- establishing lead regulators for nonbank financial firms;
- writing new rules for "nonsystemic" firms as
well as "too big to fail" ones.
- Dodd-Frank financial reform left a broken system in place.
The entire law needs rewriting. Better still, scrap it and start over.
Stiff regulations with teeth are needed, including mandatory prosecution
of crooks, especially those highest up to let others know invulnerability
days are over.
- When culpable CEO heads roll, it'll be a good start.
However, game-changer differences won't happen until all high level Wall
Street swindlers wear numbered striped suits.
- Trends forecaster Gerald Celente lost $100,000 in an
MF Global gold futures account. He told Russia Today:
- "I really got burned. I got a call," saying
"I needed to have a margin call. (W)hat are you talking about,"
he asked? "I've got a ton of money in my account. They responded,
oh no you don't. That money's with a trustee now."
- His advice for everyone holding gold ETFs is cash out
because "they are going to steal all our money." Angry about
MF Global's theft, he called Corzine a "cheap SOB." He's that
and much more.
- "How come he's not in Jail," railed Celente.
It's "because he's one of the white shoe boys from the Goldman Sachs
crowd." He added that "the merger of state and corporate power"
brought "fascism" to America.
- The entire system's too corrupted to fix. Only tearing
it down and starting over can work. It's high time the process started.
Hopefully, OWS protests began it.
- Rumor has it that JPMorgan Chase and perhaps other Wall
Street banks are involved. Judge Martin Glenn is handling MFG's bankruptcy.
HL Camp, Proprietor of HL Camp Futures, wrote him as follows:
- "Our firm is a registered introducing broker with
the CFTC. I have written to you previously on behalf of our customers."
- "Here is a comment this morning from one of our
former customers in Europe," saying:
- "I will never do business in the United States of
- According to Camp, "(t)he system is to protect futures
accounts is broken. And the whole world knows it."
- "What started as a failure of one FCM (Futures Commission
Merchant) that quickly gave a black eye to the CFTC and especially the
CME has now made our United States of America a very bad joke to commodity
futures traders all over the world."
- "The problem this morning is not just excess margin
- "The problem this morning is the reputation of the
United States of America."
- "Thank you very much for your time and for listening."
- Forbes staff writer Robert Lenzner said traders and clients
didn't know about MFG's unscrupulousness. He said a CFTC loophole lets
firms speculate with segregated client accounts. Few know it without carefully
reading contract fine print or getting sound legal advice.
- Lenzner's lesson one is CFTC Rule 1.29 must be scraped.
It lets futures commission merchants gamble with client funds.
- Lesson two is knowing personal funds aren't safe in futures
metals, energy, precious metals, or agricultural
- futures accounts.
- Lesson three is resolving which regulator oversees firms
like MFG - the CFTC or CME. One should have primary responsibility and
be held accountable for fraud.
- Lenzner added that Justice Department attorneys are determining
whether federal crimes occurred. He expects a lengthy process because MFG's
books "are in a state of chaos," deliberately no doubt.
- Whether anyone ends up indicted isn't sure. At most perhaps,
expect lower level patsies hung out to dry to let crime bosses like Corzine
stay free to steal more. It's how it always works.
- Stephen Lendman lives in Chicago and can be reached at
- Also visit his blog site at sjlendman.blogspot.com and
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