In news that should delight the “Occupy” crowd, a big brokerage firm run by a fat-cat multi-millionaire just went bankrupt. It was called MF Global Holdings, Ltd., and it was run by uber-liberal Jon Corzine, the former Democrat mayor of New Jersey (aka “the guy Chris Christie is cleaning up after.”)
The New York Post has the grisly details:
Besieged broker MF Global filed bankruptcy today after a frantic effort over the weekend by CEO John Corzine to strike an out-of-bankruptcy came up short.
The embattled broker dealer run by the former New Jersey governor hoped to sell some of the company’s assets in a complicated transaction to rival Interactive Brokers Group, a move that must receive the blessing of a bankruptcy judge, according to people familiar the situation. But that deal fell apart.
Corzine had hoped to strike a deal with a number of firms, including Barclays Capital, Goldman Sachs, Australian financial institution Macquarie Group and others, to purchase all or parts of the firm, sources noted.
However, few of the firms appeared willing to embrace fresh risk given the markets jitteriness around Europe and regulators weren’t keen either, sources say.
Even during the firm’s hectic weekend shotgun deal making, Corzine held out that his bets on Europe only needed time to bear fruit and believes that the market worries around the broker dealers is overblown.
The Post goes on to note that Moody’s and Fitch had already downgraded MF Global to junk-bond status.
How did Corzine’s firm get into so much trouble? The UK Guardian describes it as Corzine taking some very big chances with risky European bonds:
In an attempt to bolster revenues hit by the downturn in market activity and low interest rates which reduces its interest income, Corzine had stepped up risk-taking. He was in the process of transforming it from a brokerage to a “commodities and capital markets focused investment bank” and started taking bets on markets rather than just trying to match buyers and sellers.
According to the Wall Street Journal it was Corzine’s personal decision to start taking positions in European government bonds at the end of 2010, making trades himself on some occasions, as he was convinced that bond prices were too low. The firm ended up with $6.3bn of Italian, Spanish, Belgian, Portuguese and Irish debt, driving the firm to report a loss last week and sparking downgrades by rating agencies.
Italian, Portuguese and Irish debt? Hoo boy.
Don’t fret about the sad fate of this fallen liberal titan, noble Occupiers. He’ll land on his feet. He’s a top Obama fundraiser who was tapped to organize secret meetings with “key finance-industry execs and Obama’s new chief of staff, former banker Bill Daley,” as related by the New York Post. He’s often been spoken of as a potential addition to the Obama team, and with the business acumen he displayed running MF Global into the ground with high-stakes bond market gambles, he’d fit right into President Solyndra’s second Administration.
And in case you’re worried about a suddenly broke Corzine having to sleep in a Zuccotti Park tent and bum hot dogs from Occupy Wall Street, never fear – the New York Times reports that his $12.1 million “golden parachute” severance package should deploy without a hitch.