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 MF Global chief Jon Corzine oversaw the 'shocking' downfall of a financial giant

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RašytiTemos pavadinimas: MF Global chief Jon Corzine oversaw the 'shocking' downfall of a financial giant   MF Global chief Jon Corzine oversaw the 'shocking' downfall of a financial giant Icon_minitimeAntr. 11 01, 2011 9:32 am

The cost of insuring the debt of Morgan Stanley and Goldman Sachs ballooned amid fears they were too heavily exposed to the debt of Europe's most profligate governments. For Geithner, the crisis was another unwanted headwind for a US recovery already losing traction.
MF Global, whose head office is a short walk down Fifth Avenue from Manhattan's Central Park, was not in the market's crosshairs. But the futures broker, whose origins date back to London's position as a sugar trading hub in the late 18th century, did muscle its way into the headlines cheap jerseyson August 2 when it sold $325m (£202m) of bonds.
According to the prospectus for the sale, bondholders would receive an extra percentage point of interest if Jon Corzine, MF Global's chief executive, was confirmed by the US Senate in a job before July 2013. To those Washington and Wall Street insiders familiar with Corzine'scheap soccer jerseys meteoric career, the unusual clause did not need much deciphering. MF Global believed there was a chance that Corzine, whose CV included five years as the co-head of Goldman Sachs, a spell as a Democratic Senator and an almost fatal high-speed car accident when governor of New Jersey, would be picked by President Barack Obama to replace the embattled Geithner.
If there was some bemusement at the clause, there was relief among custom made jerseys the bond buyers. They, at least, would be compensated should MF Global lose the man responsible for trying to radically reshape the company since he took the helm as chief executive in March 2010.
Corzine had huge ambitions for a brokerage that made the bulk of its profits from commissions generated executing trades for clients, and from interest earned thanks to the cash balances clients held with it as collateral for their futures and derivatives positions. The scale of that mlb jerseys cheap ambition was hinted at in December when Corzine was asked how MF Global, spun out of British hedge fund Man Group in 2007, could compete against the likes of Goldman Sachs. "When I joined Goldman Sachs in the mid-70s, it was a pretty small firm," he replied. And his strategy for MF Global was, on paper, a simple one: turn it into an investment bank. In practice, that meant MF Global would be making bets with its own money, step up its market-making role for customers across a range of assets and, eventually, underwrite flotations and bond issues.
Corzine's quarter of a century at Goldman gave MF Global's shareholders the confidence to sign up. Having joined Goldman in 1974, he was a partner within five years and known for his high-wire trading skills. Even when they went wrong, he appeared able to truimph. In 1986, for example, a trading strategy designed to arbitrage between two US government bond issues looked set to lose Goldman about $150m. He took charge of the bank's fixed-income desk and over the Rolato next six months traded the position back to a small profit. By 1994, Corzine was Goldman's senior partner. "With his beard and demeanour he looks like he'd be more comfortable as a professor," says William Cohan, the author of Money and Power: A History of Goldman Sachs. "What's underneath is this incredibly ambitious, alpha-male behaviour."
But it wasn't just a CV with Goldman - which he left in 1999 after losing a power struggle with Henry Paulson - that Corzine had in his favour. Key engines of MF Global's profits were spluttering in the wake of the crisis. Low interest rates had decimated the interest income it made investing the cash balances of customers. In the last quarter, for example, MF Global made $113m of net interest income compared with $1.77bn in the same quarter in 2007. Regulation, too, looked set to make it illegal for those banks still standing to engage in proprietary trading. "His view was that Bear Stearns had collapsed; Lehman Brothers had collapsed and arguably Merrill Lynch had collapsed. And we were going to fill the hole," said one former employee.
Corzine wasted little time making bets. From last year, MF cheap nfl jerseys Global began amassing billions of euros of Italian and Spanish debt as yields soared. Until all financial shares tumbled this past summer, MF's shareholders applauded. Corzine's first year saw MF Global's shares soar 26pc compared with a 17pc return for the S&P 500. It was applause that drowned out the risks. The uncertainty of its $6.3bn of exposure to European debt became too much for even potential buyers over the past 24 frantic hours. "This was entirely preventable," says Cohan. "It's shocking."
As staff face an uncertain future, on Monday MF's website was still advertising for 56 new positions to drive Corzine's risk revolution forward
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