Unstructured Finance

By Matthew Goldstein

You can add the U.S. Internal Revenue Service to the long list of creditors and customers looking to get their money back from MF Global, the failed futures brokerage firm.

The IRS slapped a lien on what’s left of MF Global, seeking to recoup some $395,000 in unpaid taxes stemming from 2006 and 2007. The tax lien was filed with New York State’s division of corporations on Nov. 16, about three weeks after MF Global filed for bankruptcy.

The unpaid tax bill predates the period during which former New Jersey Governor Jon Corzine took over the helm of MF Global.

It was Corzine’s decision to make a big wager on European sovereign debt that ultimately sank the firm amid a series of margin calls from banks and lenders.

Earlier this year, we reported that in a last ditch bid to raise cash to meet those margin calls and return money to customers, MF Global sold hundred of millions of securities to Goldman Sachs on Oct. 27. But the proceeds from that transaction never made it into MF Global’s coffers and instead was claimed by its primary clearing firm, JPMorgan Chase.

By Matthew Goldstein

So riddle me this: How did we go from blaming “banksters” for all our financial ills to now casting teachers, cops and firefighters as overpaid government slackers who are keeping an economic recovery from picking up steam?

Somewhere, somehow, the narrative of the worst financial crisis since the Great Depression changed. Not too long ago, all the talk was about exotic securities backed by crappy mortgages, inadequate bank regulation, excessive CEO pay and burdensome consumer debt. Now the conversation in Washington and Wall Street is more focused on overly generous pensions for public employees and the levels of government spending on the poor, for education, new roads and middle class health benefits.

This isn’t too say that runaway government deficits aren’t a problem that need to be addressed–most likely with a combination of tax hikes and spending cuts. But the financial crisis didn’t begin in summer 2007 with concern about government spending.