I can vividly recall the day. I was a 2-year analyst in the fixed income division at Goldman Sachs (circa 1987). I had worked on a big presentation in which Goldman’s fixed income brain trust was going to convince the managers of the Ameritech pension fund to implement a “duration-matching” rebalancing of their fixed income holdings (Ameritech was one of the seven regional phone companies that emerged after the break-up of AT&T by the Government – this was when the Government was not completely captured by Wall St. and corporate America).
As a reward for my efforts, I was invited to an meeting in Corzine’s office in which a big group of fixed income geeks was assembled to discuss presentation strategy. At the time Corzine was head of the Government trading operations at Goldman and a powerful member of the Management Committee. After hearing Corzine strategize about how Goldman could make as much money as possible from moving Ameritech in and out of large chunks of Treasuries, the only impression I remember leaving that office with that day was that Corzine was a man who would take candy from babies and sell his mom for a nickel.
We all know the story behind the collapse of MF Global. It happened suddenly and with very little warning. While the full accounting of the truth about what happened to precipitate MF Global’s demise has been criminally destroyed by the same electronic incinerator used by Hillary Clinton to destroy her Secretary of State of State emails, we know from emails that somehow were published from JPM’s Chief risk officer – Barry Zubrow – that Jon Corzine ordered the illegal transfer of millions in MF Global customer funds to JP Morgan in order to make good on massive bets gone bad taken by Corzine. This is known as illegal hypothecation of customer funds. If the SEC and Justice Department had been doing their jobs, Corzine would have been likely prosecuted and put away. At the very least he would have faced the scrutiny of a criminal investigation and litigation. Point of note: Barry Zubrow worked at Goldman Sachs during the time period I described above.
Instead, Corzine is now making an attempt at reinventing himself and is looking to launch a hedge fund. Anyone who gives this guy is an idiot, after Corzine’s track record at MF Global, in which it would appear as if Corzine was using customer funds to run MF Global – the corporate entity – like a hedge fund.
But the overarching issue here is that DC and Wall Street is now nothing more than one large Den of Thieves. High-ranking corporate/banking officials and high-ranking Government officials collude and conspire to suck wealth by any means possible out of our system. Rule of Law does not apply.
How about the fact that Bernanke – who happens know all of the details of the Fed’s Treasury and mortgage holdings – has assumed a very highly paid position as an “adviser” to Citadel Capital? In other words, he can regurgitate his knowledge about the Fed’s positions and trading patterns to Citadel computer rocket scientists, who can then turn around and re-program Citadel’s HFT black box programs to exploit this knowledge.
My bet is that, based on the value of his inside information, Bernanke – who I’m convinced is not very bright – probably does not understand the true value of the information he will be giving Citadel and sold-out too cheaply…