Jon Corzine’s remarkable descent
In April, former New Jersey governor Jon Corzine hosted President Obama at his home in Manhattan for the first fundraiser of the president’s reelection campaign. To many power brokers in Washington and on Wall Street, the event signaled the former senator’s desire to return to Washington, perhaps even as Treasury secretary during a second Obama term.
“Obviously,” said former New Jersey governor Richard Codey, “that’s not going to happen.”
This week, Corzine’s firm MF Global, a commodities and derivatives brokerage house, imploded in a spectacular fashion, completing the one-time Wall Street and Washington grandee’s remarkable descent. The former Goldman Sachs CEO turned U.S. senator turned New Jersey governor had hoped to rebuild the fund into a career-burnishing launching pad for his return to the rarified world of high finance, or perhaps public service. Instead, it proved to be a diving board to new depths. Not only did the firm go bankrupt after its possession of potentially toxic European sovereign debt and bonds became public, but the company is being investigated for violating industry regulations by using customer money to cover its long-shot bets. It also doesn’t look great that Corzine built a $12.1 million golden parachute into his contract.
“He has got to hang up his spikes,” said Ross Baker, a political scientist at Rutgers University. Baker said any sort of government position that required a confirmation hearing would now focus on his firm. “Especially given that he seemed to be risking other people’s money.”
The loss to New Jersey Governor Chris Christie in 2009 had already effectively ended the New Jersey political career of Corzine, who did not return a request for comment. But Codey expressed a view held by many members of the Jersey political establishment — that Corzine held out hope for an eventual reputation-restoring post in the Obama administration.
“If this works out and Obama wins,” said Codey, “maybe he gets a good post and it’s a comeback and a way to finish off a legacy.”
Not everyone is convinced.
Raymond Lesniak, a state senator from Union County in New Jersey, said he had dinner with Corzine in May after the Obama event and received no indication that Corzine wanted to return to Washington. He said Corzine was mostly excited to “be back in the business world and out of Jersey politics” and interpreted Corzine’s raising of money for Obama as a way to satisfy his “public service gene.”
According to White House officials speaking on background, Corzine’s resume has the qualifications necessary to make the Treasury secretary short list were Tim Geithner ever to leave, but the latest development is a major setback.
“The collapse is total,” said one early and influential Corzine backer who requested anonymity in order to speak frankly. “The positive qualities when you run for office, taking big risks, can make you a hero. But in other circumstances, it can be a source of mass destruction.”
Taken in the aggregate, Corzine’s career resembles a cosine curve. After making millions as CEO of Goldman Sachs, he was ousted in 1994 and replaced by Henry Paulson, who eventually became Treasury secretary to George W. Bush. But Corzine regrouped and ran an impressive outsider campaign, spending nearly $60 million of his own money, for New Jersey’s Senate seat. After five years in Washington, he decided to leave to run for New Jersey governor.
“He told me once that by the time he would have any influence in the Senate, he’d be in his ’80s,” said Baker.
The Jersey political establishment, including Codey, was not pleased with the move, but Corzine did it anyway, taking the governor’s mansion in 2006. A year later, Corzine’s sport utility vehicle, racing at around 90 mph to an interview with radio personality Don Imus, hit another vehicle, severely injuring the governor, who was not wearing a seat belt. By the time the reelection campaign rolled around, many Jersey politicians questioned his commitment, and reports circulated that he had appealed to the Obama administration for a post that would allow him a graceful exit. That didn’t come to pass and, in 2009, Corzine lost badly to Christie. After that, he seemed to vanish.
“He seemed to move out of state,” Codey said. “He had no desire to run for public office again.”
To make matters worse, the Securities and Exchange Commission brought a fraud suit against Goldman, casting doubt on many of its practices under Corzine’s leadership. It was in that down-and-out context that Corzine came to MF Global in March 2010, which had already survived a scandal in 2008 connected to a trader making unauthorized bets. Corzine told reporters at the time that Goldman, too, was a smaller firm when he started there and that he viewed MF Global as a tremendous opportunity. Wall Street seemed to agree. The company’s stock went up 25 percent in the months after he joined.
But no one realized just how big a bet Corzine was willing to make.
People close to Corzine, who was known to make trades himself at the firm, said they personally warned him about the dangers of acquiring European debt, but that he shrugged them off. That extreme self-confidence was well known among his peers, but one confidant of Corzine balked at “this level of risk. It’s indefensible.”
As his firm’s bankruptcy, and his own collapse, became public this week, the news reverberated across the many spheres with which Corzine had come in contact. People on Wall Street gaped, remarking that the allegations seemed more representative of trading practices in the early 1990s. Back on main street, in Corzine’s hometown of rural Taylorville, Ill., friends were just as taken aback.
“I was probably as shocked as anybody when this came over the news,” said Jack Mazzotti, a friend from high school who Corzine flew to Washington when he was inaugurated senator. “This is not Jon Corzine. There’s got to be a story behind this.”
Corzine's Lack of MF Global Controls Exposed With Missing Money
Poll: Dismal ratings for both parties
