Jon Corzine’s business plan at MF Global, it seems, was getting rich off of big government.
The New York Times report today makes clear what everyone already suspected: that Corzine was banking on a European Central Bank bailout.
Here’s the Times:
He pushed through a $6.3 billion bet on European debt — a wager big enough to wipe out the firm five times over if it went bad — despite concerns from other executives and board members….
The European trade was initiated by Mr. Corzine late in the summer of 2010. The new chief executive explained the bet to a small group of top traders, arguing that Europe would not let its brethren default. In just a few months, the trade swelled to $6.3 billion, from $1.5 billion.
The European trade was initiated by Mr. Corzine late in the summer of 2010. The new chief executive explained the bet to a small group of top traders, arguing that Europe would not let its brethren default. In just a few months, the trade swelled to $6.3 billion, from $1.5 billion.
But bailouts weren’t the only big-government action Corzine was trying to use for profit. He also planned to use regulation to profiit, according to the Times’ report
Mr. Corzine arrived just as Washington was pressing the big banks to curb their lucrative yet risky businesses. Spotting an opening, he fashioned new trading desks, including one just for mortgage securities and a separate unit to trade using the firm’s own capital, a business known as proprietary trading.
Always remember this about regulation: it’s often the way politically connected businessmen profit, at the expense of others.
