Revolution: Corzine in Prison? And, Denninger on the Fed.
Nearly two years later, why now? [Jump in at 2:12 to see our interview with James Koutoulas.]
That's the question we pose to the CFTC and DOJ (and Mr. James Koutoulas, above) regarding the recent suit against Jon Corzine. According to John Roe, another founder of the Commodity Customer Coalition, the Department of Justice needed to issue an "OK to proceed" prior to any such civil suit. Any criminal charges would need to be brought by the Eric Holder-led[/damaged] agency. (And let's not forget that the former head of the DOJ's FBI, one Louis Freeh, was [until recently] the trustee in the MF Global bankruptcy case -- watch out BP :->).
Just a thought experiment: the CFTC is demanding a jury trial. Would a jury of Mr. Corzine's "peers" inlude Jamie Dimon and Lloyd Blankfein? (Maybe doing God's work actually gets you out of jury duty.)
But a suit against Corzine could have been brought as soon as weeks or months after MF Global's October 31, 2011 bankruptcy. They were not. The head of the CFTC (and former employee of Jon Corzine in the late 1990's), Gary Gensler, recused himself after four days of excrutiating inaction, in which traders could not so much as close out market positions. And, a recent Office of Inspector General report concluded Gensler's retreat was not even unnecessary.
According to the Chairman himself, Gensler may leave his post at the CFTC this month. Is he preparing for a revolving door move to a shadow regulator, such as Promontory Financial Group (which, by the way, signed off on MF Global's "risk controls" prior to the firm's blow-up)?
Another question: why Jon Corzine and Edith O'Brien?
These are the two named in the CFTC suit. Maybe the recent too-big-to-jail outrage will result in the biggest little fish disgourging his Goldman Sachs IPO windfall.
Edith O'Brien was responsible for managing MF Global's customer cash (which, in part, was wired to JP Morgan), which according to numerous trustee reports, she managed on Excel spreadsheets and in her noodle (we know how that worked out for Mr. Iksil.)
Why not Laurie Ferber?
Ferber (another ex-Goldman Sachs employee, who, by the way, manipulated energy markets ahead of the 2006 mid-term elections), was MF Global's general counsel and the go-to regulatory manipulator for MF Global.
When MF Global wired $175 million to JP Morgan using customer funds just prior to the firm's blow-up, JP Morgan demanded a comfort letter that the money did not belong to customers. Ferber stalled, demanding Edith sign off on responsibility, which she did not.
Then, on the day of the bankruptcy, Ferber sent a letter to regulators, including the SEC and CFTC that customer money was missing. Curiously, the very next day in court, Kenneth Ziman, the bankruptcy attorney for MF Global said there was no such shortage. CFTC attorney White decided not to contradict him.
The entire bankruptcy and liquidation was riddled with lies, manipulation and outright deception. So, with customers slated to (finally) receive 100 cents on the dollar (without interest), the only relevant question left is: will we see a Corzine criminal conviction?
And speaking of rotating chairmen, we talk to Karl Denninger about Fed policy, interest rates, and Bernanke's replacement...right here:
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