By Kilgore Trout
The law is the great rule in every country, at least in every free country, by which private property is ascertained.
Cato’s Letters: Nov. 19, 1720
There’s stupid and then there’s stupid, as the saying goes. Add a dollop of arrogance then stir in a barrel of inexplicable, life long success at “failing up” and there you have the great Wall Street gambler Jon Corzine. The former CEO of Goldman Sachs, a close buddy to our beloved president, has served both in the U.S. senate and as governor of New Jersey; many men have opined that this country needs more high-achievers like him. Yet now we hear that Mr. Corzine needs to find – pronto - $1.2 billion dollars of missing customer money, gone invisible since the bankruptcy of MF Global, the brokerage house he gambled into oblivion.
Mr. Corzine’s present trouble, for which he is so far inexplicably handcuff free, stems from the collapse on October 31 of the MF Global casino, said collapse revealing $1.2 billion of customer money gone AWOL. Having burned through the firm’s capital on a wrong way, highly leveraged wager concerning the debt of bankrupt European nations, Corzine claimed to be shocked, shocked to his gills when informed (as he hadn’t the slightest inkling) that customer accounts were looted to fund the shortfall.
This is all the more stunning as it is the financial industry’s Hippocratic oath that customer funds are not for any reason to be commingled with the company’s own capital. In the same manner as your local bank is not allowed to pay their electric bill with a check drawn on your personal account, MF Global can’t cover the house trading loses using its customer accounts - yet it is almost certain that is exactly what happened.
During the first of his three Congressional subpoenas Mr. Corzine made carefully phrased claims that he had no “intent” to use client money and did not “knowingly” give the go ahead to do such a thing, yet his words ring hollow. At any Wall Street firm you need to make clear to your employees that customer funds are off limits about as much as you need to make clear to them it’s not safe to step in front of a subway. It just goes without saying.
Also, $1.2 billion dollars, even in a world where central bankers piss up trillions at a keystroke, is still a truckload of money, and if I were a betting man I’d say there’s not a snowball’s chance in hell that Corzine’s underlings did not clear this move with him prior to its execution. This was a major operation, a poorly thought out dishonest response to a self-induced crisis by a man who is, despite his impressive resume, not the brightest of bulbs. When MF Global desperately needed a lion, in Jon Corzine it was delivered an ass.
That Mr. Corzine is a bumbling fool has long been obvious to any impartial observer yet only now is he being noticed for the walking disaster he is, always has been and forever shall be. (Amen.) As CEO of Goldman Sachs he took the highly mercenary, short-run and ultimately fatal approach to banking started under Robert Rubin, tucked it under his arm and ran with it, then he slithered up his near uncountable pile of winnings onto high political office, happily legislating more debt to be repaid only when an always-distant “long-run” arrived, finally moving on to CEO of MF Global, which he promptly flushed into the Hudson in less than two years flat. Mr. Corzine needs to go back into government work; he’s too much of a first class screw-up to make it unaided in the private sector.
Most important here due to Mr. Corzine’s status as a well-connected political player is something much more than a mere question of lost money; it’s a test of the rule of law that protects our property from lootings by ignoble, powerful men who will, to save their own skin, throw immense sums of Other Peoples’ Money into the breech to plug gambling losses they had nothing to do with.
The fact that Mr. Corzine has yet to be placed in handcuffs or under house arrest despite the disappearance of $1.2 billion that was placed under his care highlights the double standard American justice applies, one set for the working masses and another for those who exist at the top of America’s class structure: the political class. Bernard Madoff was (rightly) treated as someone worthy of the highest suspicion; why isn’t Jon Corzine?
Making this kid gloves approach even more galling, Mr. Corzine was the prime sponsor of legislation that provides federal highway safety grant incentives to states that agree to impound the cars of DUI suspects. Yes, suspects, as like the Queen in Alice in Wonderland who screams, “Sentence first! Then trial!”. Shouldn’t we, in the interests of respecting Mr. Corzine’s impressive legislative legacy, impound property of his? I’m sure he has an extra home or three he could spare.
So what to do with Mr. Corzine should the courts find him guilty on the criminal side of the ledger, for having looted $1.2 billion of Other Peoples’ Money? I’m not worthy to judge of my fellow man, being much too flawed, but I’ll point out that Cato from November 12, 1720 (post the burst of the South Seas bubble) warned that in regards to great public figures as are found guilty of such crimes we must do something as “for a nation to suffer itself to be ill used, is of dangerous example…(and) invites fresh injuries.”
Agreed. Rome would have prolonged her liberty and her Republic for generations to come had she raised fresh legions and, as their laws called for, crucified Julius Caesar for crossing the Rubicon. If it is found that Jon Corzine did in fact do what he appears to have done and justice is not served, we will have lost far more than just $1.2 billion.
Kilgore Trout lives in New York City. He may be reached at kilgoret44@gmail.com