“The idea that [Jon] Corzine, who single-handedly destroyed MF Global Holdings, was in a position to command so much as a penny in severance is horrifying. It suggests two things. The first is the extent to which ‘heads-I-win-tails-you-lose’ remains the operative concept for Wall Street compensation. The second is that one’s politics doesn’t much matter when it comes to lining one’s pockets. Corzine is an avowed liberal who has decried income inequality and Wall Street pay — but right up until the end, he had his hand out for millions he didn’t deserve.”—Joe Nocera, “Corzine Crashes Like It’s 2008,” The New York Times, November 1, 2011The picture accompanying this post reminds me of the tagline Esquire Magazine ran during the Seventies next to a picture of Richard Nixon: "Why is this man smiling?" In both cases, it represented the temporary gloating of a too-clever-by-half politician who didn't see the fall he was about to take.
In a way, you could have predicted the mad course that Jon Corzine chose at MF Global Holdings—in Nocera’s words, “taking giant bets on shaky, long-term bonds while financing your operations with overnight loans that can be pulled at any second”—four years ago, when the then-governor of New Jersey crashed in his limo . Talk about risky behavior: Having your driver, a state trooper, gun the car at 91 miles per hour in a 65 MPH zone, then, in the bargain, you don't wear a seat belt—both actions against the law—was not only self-destructive, but could have caused collateral damage to anyone near him. (All of this not for a genuine emergency, but for a photo op: the much-ballyhooed meeting between the coach of Rutgers’ women’s basketball team and shock jock Don Imus.) For his hubris, Corzine was badly injured.
The governor, we were told then, had learned his lesson (though that, predictably, was spin--the second he made it out of the hospital, he returned to Drumthwacket, the governor’s mansion, in a van clocked 15 MPH over the speed limit). The events of the last week, however, demonstrate that this was only in the metaphoric sense. He crashed again--this time, with other people’s money.
Whether Corzine is indicted, let alone goes to jail, is one thing, but it seems a safe bet to say that the wish closest to his heart--to be a real player in the Democratic Party--is over.
When he first ran for office, nobody really thought he’d be satisfied for long as a one-of-one-hundred U.S. Senator. He needed to be an executive, the way he was as CEO of Goldman Sachs before being forced out. And so, he set his sights on being governor of New Jersey. All that money from his Goldman days enabled him to elbow out better candidates, notably Richard Codey.
Then, once he got a good look around at the state of the state--all those bosses and interest groups to be placated, all those fiscal bodies lying around in the so-called “Soprano State“--Corzine couldn’t wait to find a graceful exit. Treasury Secretary looked like a great deal, except that he backed the wrong horse in 2008, supporting Hilary Clinton, so President Obama felt no compunctions about naming Timothy Geithner to the post.
A second term as governor was a meager consolation prize that Corzine still couldn’t pull off. In the last gubernatorial election, Chris Christie wasn’t yet the GOP rock star he would later become. He was already showing signs of becoming the loudmouthed jerk he now, so manifestly, is. And yet, the brilliant campaign Corzine & Co. created against him was an ad saying--wink-wink!--that the rotund challenger would be “throwing his weight around,” an unimaginative ploy that only boomeranged with a sizable part of the electorate that had their own weight issues. Corzine couldn’t engage Christie on the issues, as he should have--and could have--done, so he deserved to lose.
The move to MF Holdings must have seemed a brilliant maneuver for Corzine, sort of like an NFL option play in the hands of Michael Vick. He could pass— I.e., look downfield for a really big payday. Or he could run with the ball himself--I.e., hold onto his earnings long enough for a reelected Obama to come to his senses and replace an exhausted Geithner at the Treasury with a rebranded Corzine.
Corzine elected not merely to pass, but to throw a bomb. It was, as Nocera indicates, like Lehman 2008 all over again.
We'll find out soon enough whether Corzine directed that client funds be used to keep MF Global afloat-- a definite SEC no-no. But at very least, he was asleep at the wheel when someone else was pulling this off. That would not exactly be something you'd want to put down on your resume if you wanted to watch over the finances of Aemrica.
Corzine’s failed political career and messy denouement at MF Global would, one hopes, finally put to rest a couple of hoary ideas that, in the face of all facts, have managed to endure.
The first is about the value of a politician who “knows the value of a buck.” This was the ticket to Gracie Mansion for City Comptroller Abe Beame, who went on to flail over New York City’s fiscal crisis. Similarly, Corzine, who made millions at Goldman, trumpeted himself as a wise steward of money. That left the citizens of New Jersey all the more perplexed, then, by Corzine’s “asset monetization” plan, one that, for the life of them, they could not understand how it would be anything other than just another gimmick to make the state’s budget deficit look better than it was. (In a sense, of course, that scheme was just a variation on the head-scratching maneuver Corzine would try at MF Global.)
The second idea is the notion that a rich man can’t be corrupt because he can’t be bought. What that theory neglects is the very real threat that he can buy off others. That is what happened in Corzine’s first, successful attempt to become governor of New Jersey, when all his Goldman lucre looked pretty good to county bosses who backed him in the race.
Corzine gives an especially forceful reminder of the dangerous nexus between wealth and politics in this country. It can enable someone not just to get into high office (Corzine) but to stay there by spreading around enough goodies (New York Mayor Mike Bloomberg, suborning the City Council to void the ban on third terms for mayors).
In another sense, it’s a good thing that Corzine’s career has cratered for the third time. His millions would have made him, if not a major possibility for a Treasury Department post, at least a moneyman to whom the President would have to listen.
Whatever its other woolly notions (or lack of even these), the Occupy Wall Street movement has shown us the danger of such high-placed counsel. America finds itself in such a perilous financial mess because for years, it did not have a second, credible party that would look long and hard at a financial system running dangerously amok. The influence of Wall Street on Democrats didn't end with Robert Rubin or Steven Rattner. As of October 25, President Obama had raised nearly $12 million from Wall Street contributors to the Democratic National Committee.
Corzine would have been just one more high-placed fiscal consigliore whispering in the ear of an ostensibly progressive Democrat that really, all was well with The Street if we just left it alone. His fall was opportune in more ways than one.
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