Corzine apology little better than Fuld’s defiance
By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Jon Corzineās apology isnāt much better than Richard Fuldās defiance. The former boss of MF Global told the U.S. Congress on Thursday he regrets the loss of money and jobs caused by the firmās collapse. But his prepared statement is also full of dubious explanations that donāt improve much on the blame-game tactics and lack of contrition from Lehmanās ex-chief.
The onetime senator threw caution to the wind by acquiescing to a grilling by his former congressional colleagues. Corzineās carefully worded remarks may nevertheless return to haunt him in court. But even now, they raise troubling questions.
For starters, he says his resignation deprived him of valuable information, particularly corporate records that might reveal what happened to as much as $1.2 billion in missing client money. Why didnāt he stick around and seek answers instead?
Corzine also professes heās no accountant, with limited knowledge of how trades were cleared or money moved. That may be technically true, but as a trader, he was almost certainly aware of the benefits – and risks – of the off-balance sheet treatment given repurchase agreements involving sovereign debt. Whatās more, the Sarbanes-Oxley law makes him personally responsible, as CEO, for the accuracy of the firmās financial statements.
His points about leverage are equally woolly. Corzine contends he reduced the firmās borrowing from over $37 for each $1 of capital to about $30. But reducing leverage wonāt help much with risky investments like Irish and Portuguese sovereign debt. And while company directors approved his decisions, Corzine didnāt, in his prepared statement, address media reports that he pressured them to get his way.
Roughly three years ago, Fuld went obstinately to Congress shortly after Lehmanās demise. He pointed fingers at short sellers, rumors, the media and the global financial crisis. He complained that the Federal Reserve and Congress helped other banks while letting his fail. The closest he came to an apology was to say he āfelt horribleā for what happened.
Corzine did marginally better on that score. He said he was sorry to those who bore the brunt of MFās bankruptcy. But in the end, Corzine portioned out most of the blame. On Wall Street, remorse still comes without responsibility.