Yesterday, some MF Global execs testified before Congress and plead the 5th. Today, they are being castigated in many parts of the press for not talking.
I think the press is misguided in their criticism.
First, let’s recognize what is really going on here. There was a fraud and subsequent perjury committed by a former Democratic Senator, Governor and CEO of Goldman Sachs. Do you think that Corzine might have some political capital? Some connections deep inside the bureaucracy? Some connections in the press that might have an interest in hiding the truth and blaming someone else for the theft?
Second, who was the counterparty to the transaction with MF? JP Morgan ($JPM) and Goldman ($GS). Do you think that they are exerting whatever power they can muster to avoid a really in depth investigation? Wouldn’t they rather just have some straw man burned at the stake and make the whole thing go away?
Third, it’s an election year. Corzine was once considered one of the sharpest financial minds in the world by the current occupant of the White House. Corzine was a leading fundraiser for Obama. In politics, money talks and bullshit walks. The way of the Chicago machine is to never forget your friends, especially if they own a big checkbook. Corzine is from downstate Illinois-he is familiar with the ways of the machine. He knows it will protect him as long as he can find a reasonable fall guy.
Gary Gensler was a close pal of Corzine’s. He runs the CFTC. The CFTC is the agency in charge of the commodity business in America. Gensler would like this whole thing to be buried deep in the sand too. The scandal shows the ineffectiveness of the CFTC. Because Corzine committed a fraud and perjury, it kind of reflects on the company that Gensler pals around with. He has recused himself, but believe me, he’d like to see the whole thing settled with a nice bow on it.
At one point in the hearing, Pearce seemed to suggest that the CFTC was urged by another government agency to cease its investigation MF Global, asking the panelists, “Do you have any idea why the CFTC would be asked to cease and desist their investigation?”
The machine, Obama, Wall Street, the federal bureaucracy and the liberal press all have an interest in making it go away.