Corrupt Government
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Title: No political fix for "Obama's Wall Street guy" Corzine's (D-NJ) bad bond bets
Source:
The Washington Examiner
URL Source: http://campaign2012.washingtonexami ... cal-fix-corzines-bad-bond-bets
Published: Nov 3, 2011
Author: Timothy P. Carney
Post Date: 2011-11-03 09:55:00 by Happy Quanzaa
Keywords: Obama-doma-ding-dong, Obamanomics in Action, Corzine, Goldman Sachs, MF Glo
Views: 8618
Comments: 15
Former Democratic politician Jon Corzine's financial firm MF Global collapsed over the weekend in a spectacular bankruptcy that provided an insider's glimpse into how finance and politics work today. The telling detail about MF Global's business can be found in the contracts it signed with its biggest lenders, so-called "senior creditors." These creditors, in effect, knocked a whole percentage point off the interest rate they charged MF Global solely because Corzine was at the helm. Under what is known as a "key man provision" in the contract, bondholders would get an extra point of interest in the case of "the departure of Mr. Corzine as our full time chief executive officer due to his appointment to a federal position by the President of the United States and the confirmation of that appointment by the United States Senate." This isn't a normal provision for bond contracts. "It's unique," said Alex Diaz-Matos of Covenant Review, a firm specializing in bond agreements. "It's like nothing that I've seen before, and I read a lot of these." So what made Corzine uniquely indispensable? Diaz-Matos suspects it's mostly Corzine's Goldman Sachs experience, and the prospect that he could turn MF Global into a "mini-Goldman." But the details of the key man provision give us a clue toward another Corzine asset: his political connections. Why did bondholders suspect Obama might hire Corzine? Because Corzine, a former Democratic U.S. senator and governor, was once a colleague of Obama's. He raised money for him, campaigned for him and made personal donations to him. Obama, in fact, called Corzine "our Wall Street guy." Corzine was also tight with the Senate Democratic Caucus. In 2004 he was chairman of the Democratic Senatorial Campaign Committee, which made him the chief fundraiser for the party's Senate candidates. In that role, he funneled $34,000 to Obama's Senate campaign. After endorsing Hillary Clinton during the 2008 Democratic primary, Corzine (then governor of New Jersey) hustled to become an enthusiastic Obama backer, adviser and proxy. During the 2008 general election, Corzine became "a mouthpiece for Barack Obama's economic policies," in the words of the Asbury Park (N.J.) Press, representing the Obama campaign on NBC's "Meet The Press" and CNBC's "Squawk Box," among other shows. He was widely thought to be on the shortlist for Treasury secretary, as his "key man" status indicates. For Obama's re-election, Corzine has given more than $60,000, including the annual maximum to the Democratic National Committee this year, and the $5,000 maximum to the Obama campaign. His wife, Sharon Elghanayan, has also given more than $35,000 to Obama's re-election. But that only scratches the surface of Corzine's financial aid to Obama for America. According to the list of "volunteer fundraisers" (also known as "bundlers") released by the Obama campaign, Corzine had already raised more than $500,000 by July. Exactly how much has he hauled in for his old Senate colleague? The campaign did not return my query on this by press time. Corzine's chief lieutenant at MF Global was Bradley Ira Abelow, also a $35,800 donor to Obama. Abelow was Corzine's chief of staff in Trenton, and New Jersey state treasurer. The Obama administration appointed Abelow chairman of the Environmental Protection Agency's Environmental Finance Advisory Board. Corzine's Democratic ties go way beyond team Obama: The Clinton administration called him in to help with the bailout of Long-Term Capital Management, and he's a big donor to Democratic senators and congressmen (including a $100,000 soft-money gift to the Democratic Senatorial Campaign Committee just before the 2001 campaign finance restrictions, which he supported, would have prohibited such a gift). And given the platoon of Goldman Sachs alumni in the White House, Treasury, and Securities and Exchange Commission, former Goldman CEO Corzine is sure to have some former underlings in positions of power. So, what is the value to MF Global of Corzine's intimate connections to power -- of his being Obama's "Wall Street guy"? First, there's the chance that government would provide MF Global with extraordinary help. There's plenty of reason to suspect that inside connections are very valuable in this age of bailouts and Obamanomics -- consider, for instance, how the Obama-supporting United Auto Workers skipped over senior creditors during Chrysler's Obama-managed bankruptcy. Second, investors and creditors might expect that MF Global would have inside information. Is the White House going to help bail out Italy? Corzine would know better than most. Where are green subsidies heading? Corzine's deputy Abelow has the inside track. This is the economy spawned by Bush's bailouts and Obama's slew of subsidies, regulations and mandates. Money follows political connections. The perverse upside of MF Global's collapse: At least we know political connections still aren't worth everything.
U.S. President Barack Obama (right) speaks as then-New Jersery Governor Jon Corzine (D) looks on at a campaign rally at
Fairleigh Dickinson University's Hackensack campus October 21, 2009 in Hackensack, New Jersey. Obama was supporting Corzine
in his effort to win a second term as governor. (Photo by Mario Tama/Getty Images)
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Begin Trace Mode for Comment # 8.
#5. To: Happy Quanzaa (#0)
Funny that wherever you see real crap, incompetence, and corruption, Goldman Sachs is always right there.
Going back to the 1929 crash, mon frer...
Forget about "It's good to be king". It's better to be "Too big to fail".
#9. To: Skip Intro (#8)
Fortunately for them it's not lyrical...
Top • Page Up • Full Thread • Page Down • Bottom/Latest
#7. To: Skip Intro (#5)
Funny that wherever you see real crap, incompetence, and corruption, Goldman Sachs is always right there.
#8. To: war (#7)
Going back to the 1929 crash, mon frer...
Replies to Comment # 8. Forget about "It's good to be king". It's better to be "Too big to fail".
End Trace Mode for Comment # 8.
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