Thain and Corzine redemption doesn’t come easy

April 28, 2011

By Antony Currie
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Jon Corzine and John Thain are in a long slog to revive their high-flying Wall Street careers. In early 2010, each of the two former Goldman Sachs partners took the reins at far smaller financial firms than their illustrious pasts would once have suggested. Corzine now runs agency broker MF Global, while Thain landed at mid-market lender CIT. The two have certainly made progress. But full rehabilitation looks a way off yet.

Shareholders might be willing to write glowing recommendations. CIT’s shares have jumped by more than a third since Thain arrived in February 2010 — almost three times as much as the increase in the KBW banks index. Corzine, meanwhile, has overseen a 20 percent jump in his company’s stock during his 13 months on the job, outperforming the KBW capital markets index fourfold.

Both firms, however, had been struggling badly and lagging the recovery at some larger rivals. CIT had just emerged from bankruptcy when Thain was installed, following his banishment from the Bank of America Merrill Lynch <BAC.N> kingdom, and MF Global had been bleeding losses for two years before Corzine rode in after New Jersey voters sent him packing from the governor’s mansion.

A year later, both look in better shape. CIT has been repaying debt, extending average maturities to 2013 and winding down some unwanted assets. Just last week, regulators removed a July 2009 order preventing CIT Bank from conducting some operations. MF Global now reports operating profit, has added a number of senior bankers and has become a primary dealer with the New York Federal Reserve.

But Corzine’s ambition to transform the firm into a full-service investment bank will require more patience — and special items still leave the firm in the red. Thain is still grappling with how to secure stable long-term funding for CIT.

That means both are still saddled with the events of their recent career nadirs. For Thain, it’s the taint of Merrill’s near collapse during the crisis and his expensive taste in office decor; for Corzine, it’s leaving his state in bad economic shape and losing what originally looked like a safe re-election campaign. But with neither facing challenges that look as formidable as they did 12 months ago, their fortunes — and reputations — may eventually turn.

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