Wednesday, January 28, 2015

Ex-NJ gov's 'criminal' career: Why US hates Wall St

If Corzine were a Republican, 'leftist' NY writers would demand he go to prison, says Nancy Bush

Ex-NJ gov's 'criminal' career: Why US hates Wall St

Nancy Bush, a banking-industry analyst who left Wall St. to run her own shop, says in her SNL Financial column that she finally gets why many Americans despise big banks and distrust government regulation. Read her column here. Highlights:

Bush cites this NYTimes item: "A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer funds is now heading into its final stage without charges expected against any top executives … Criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear …"

Prosecutors' conclusion that "chaos" and poor risk control isn't illegal "will come as cold comfort to the farmers and small-scale commodities traders who are waiting for someone — anyone — to tell them what happened and how they will reclaim the roughly $1.2 billion that went missing, apparently in the space of a day or two," writes Bush.

"I'd like to find out myself how anyone at MF Global thought that it was OK to commingle client funds and firm capital to begin with, in contravention of one of the most sacrosanct of all Wall Street commands." The "chaos" excuse "does not cut it in an environment when... ample and cheap technology was readily available to prevent such a commingling of funds from happening...

"When does such criminal stupidity become — well, just criminal?

"Even for a jaded market professional like myself — who theoretically should know the difference between market misdeeds that are criminal and those that will only result in civil penalties (that will then cost shareholders a bundle) — that once-bright line has faded."

In "the legal gray zone — the one where the MF Global, Goldman Sachs Group Inc. and the Abacus CDO, Standard Chartered Plc and its Iranian dealings, etc., reside... the various regulatory bodies involved seem to be both a day late and a dollar short when it comes to detecting bad behavior and then only able to seek civil remedies that are not harsh enough to prevent it all from happening again...

"What do we need as a society to enforce greater discipline in the financial services industry? More and better regulators? A new set of penalties that will hold managers and boards of directors to greater personal and monetary account? Weren't we supposed to get that with Sarbanes-Oxley and Dodd-Frank?...

"I... have been rooting for [MF Global's] clueless CEO, Jon Corzine, to be the one Wall Street personality to do time behind bars.

"The leftist New York media has been mostly silent on Mr. Corzine's role in the scandal (he has been, after all, one of the major "bundlers" for the Democratic Party)... Paul Krugman, Joe Nocera and the whole staff of New York magazine would having been screaming for the head of any Republican who had led investors down a similar path — witness the daily media drubbing of Mitt Romney and Bain Capital, where there has been no illegality...

"After having been booted out of Goldman Sachs for terminal arrogance, having been an indifferent and ineffective senator from New Jersey... a terrible governor of this state" who slept with the head of the public workers' union, Carla Katz, while negotiating against her, "and the CEO of a massively failed Wall Street enterprise, Corzine is reportedly (according to the same NYT article) contemplating his next move — as a hedge fund manager...

"At least Dick Fuld, the disgraced CEO of Lehman Brothers, has had the good sense to retire and stay out of the public eye, and ditto for Ken Lewis, of Bank of America... If Corzine is allowed back into the financial services industry in any shape, form or fashion — well, that would just be criminal." His clients, Bush concludes, deserve to lose money.

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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