What a guy! Jon
Corzine ran Goldman Sachs (before he was pushed out by former Goldman Sachs CEO
and former Treasury Secretary Hank Paulson).
Then he served as United States Senator for New Jersey (before he left
to run for Governor). Then he served as
Governor of New Jersey (before losing his re-election bid to Chris Christie in
2008). What a resume!
Next stop: CEO of MF Global, a sleepy
not-particularly-profitable financial institution. Corzine transformed the company into an
aggressive trading machine that valued risk-taking and looked to make it
big. The Goldman Sachs wannabe under
Corzine took big risks and disregarded repeated warnings from Chief Risk
Officers about those risks.
The big bet was of European sovereign debt, which Corzine
pushed and led from the start.
Ironically, it’s not that the bet lost money, but rather this was the bet
that led to the eventual downfall of the company. In the post-2008 financial crisis era, regulators
are paying a little more attention, and when they questioned the trade and the
leverage behind it, they also demanded more collateral in case it went
bad. Corzine had stretched MF Global to
the limit in his bet-the-company strategy, and when demands for more capital
could not be met, the run on the bank was on.
MF Global is now bankrupt, a mere 20 months after Jon
Corzine took over as CEO.
The denouement will take some time, as there is still the
little matter of a billion dollars or so that has gone missing. Corzine has testified that he knew
nothing of this, and he may well be telling the truth. But, if the buck doesn’t stop with the CEO,
where does it stop?
Tomorrow I reveal my choice for #2 Worst CEO of the
Year. I hear there might be a movie
version of this person’s stellar year.
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