Republicans blame Corzine in MF Global failure
WASHINGTON (AP) — Republicans on a House panel that investigated the collapse of the brokerage MF Global are pinning the blame on ex-CEO Jon Corzine, a former Democratic senator and governor.
The Republicans say that the investigation found that Corzine's decisions caused MF Global's bankruptcy in October 2011 and its loss of more than $1 billion in customer money.
They say Corzine turned the brokerage firm into an investment bank that made risky trades. They also say Corzine ran the firm in an authoritarian manner and didn't allow anyone to challenge his decisions.
The firm failed after losing a $6.3 billion bet on bonds issued by debt-burdened European countries such as Italy and Spain.
The House Financial Services oversight subcommittee is to release the report of its investigation Thursday.
Corzine, through a spokesman, disputed the conclusions put forward Wednesday by the GOP lawmakers. He said he "acted in good faith" at all times.
The spokesman, Steven Goldberg, called the idea that Corzine ran MF Global in an authoritarian way "hyperbole."
"All of the firm's significant business decisions, including the change in business strategy and the (European debt) investments, were subject to review, debate and approval by the MF Global board of directors," Goldberg said in a statement.
"When Mr. Corzine joined MF Global he was tasked with quickly turning around a failing business," he said. "(Corzine) set a new strategy for the firm after extensive discussions with the board, the senior management team and well-respected outside consultants."
Corzine told Congress last December that he never intended to misuse customer money or order anyone to do so.
Legal experts say it could be difficult for the government to build a persuasive case that he did.
Rep. Randy Neugebauer, the Texas Republican who heads the subcommittee, said in a news release that choices Corzine made as the firm's CEO "sealed MF Global's fate."
"Corzine dramatically changed MF Global's business model without fully understanding the risks associated with such a radical transformation," Neugebauer said.
The GOP lawmakers said the panel's staff interviewed more than 50 witnesses and reviewed 243,000 documents from MF Global, former employees of the firm and federal regulators.
The Republicans said Corzine acted as the firm's chief trader in practice, though not in name, and walled off his trading from the firm's review of its potential risks.
Rep. Michael Capuano of Massachusetts, who leads the minority Democrats on the subcommittee, said he isn't supporting the report on the investigation mainly because he hasn't had enough time to review it and discuss it with his Democratic colleagues.
"While I agree with a number of the report's observations and recommendations, others require additional commentary," Capuano said in a statement.
Corzine rose from the trading floor of Goldman Sachs to become the investment bank's co-chairman. He then ran successfully for the U.S. Senate in 2000 and later served one term as governor of New Jersey.
Corzine took the top job at New York-based MF Global after losing a bid for re-election as governor in 2009. He stepped down as MF Global's CEO on Nov. 4, 2011, days after the firm filed for bankruptcy protection.
For months, regulators investigated whether the missing customer money was improperly used to cover MF Global's short-term needs when its trading partners lost confidence in the firm and demanded cash owed them.
Much of the missing money belonged to farmers, ranchers and other business owners who bought and sold financial contracts with MF Global to reduce their risks from the fluctuating prices of corn, wheat and other commodities.