I Goofed Again!

Pity Jon Corzine. He can't seem to do anything right. He only served five years out of his six year U.S. Senate term. He was governor of New Jersey for only one term before that bully Chris Christie defeated him. After he was booted out of office, he returned to his banking roots and screwed up big time by gambling. Apparently, he forgot that during his term as governor, the financial industry collapsed, in part because of excessive risk. So what did he do? He leveraged MF Global with $40 worth of debt to every $1 worth of equity. How imprudent is that under the best circumstances?

There are a few things more disturbing than Corzine's record. First, there is the team that agreed to his "Heads I win, tails you lose" severance package of $12 million. Granted, $12 million is not what it used to be, but the crash of 2008 should have made the powers that be very reluctant to offer rewards for poor performance. Aren't the members of the boards of corporations embarrassed at least a little when a company's earnings and stock price flatten or decline, or worse, when the company goes bankrupt? Board members are directors. They're supposed to be guiding the company. They're supposed to be smarter and more responsible than anyone else, including the CEO.

Second, the accountants and auditors apparently again rubber stamped everything all along, just as Arthur Anderson did with Enron. Heaven forbid they should actually look at every piece of paper and verify that things are kosher. It's a tedious task, but had they done so, they might actually have accounted for the $700 million that somehow disappeared.

Third, the media was so focused on the words "too big to fail" that a clause in the Dodd-Frank bill fell off people's radar. This is the part about mid-sized financial institutions, not large ones. (Sorry, Jon. You were not one of the big boys, after all.)

Finally, word had it that Corzine was to be tapped to be the next Secretary of the Treasury. Heaven forbid! A lot of investors lost their money in MF Global.As far as I'm concerned, the MF Global case should be the definitive argument for more government regulation, not less. A government's only purpose is to protect its citizens, not just Wall Street. It's bad enough that the government failed to do that in the past. Its leaders certainly should have learned from the 2008 crash.

Recently, my argumentative bond broker dismissed risk for investors. He said that we all know we're taking a risk with our money. I countered that I know there is risk, but that investors should not have to bear the consequences of imprudent risk taken on by those in the companies I invest in. There is a huge difference between investing in a company that doing research on genetics or creating a product that is useful and saleable, and investing in a company that fails to do its due diligence, to carry out its fiduciary responsibilities or to have proper accounting. Years ago, I invested in Chase Manhattan Bank (before it merged with JP Morgan). I lost money in it because the decision makers in the financial department made loans to Enron. I could not possibly have known that. The value of my investment went down strictly because of that.

Corzine is not alone in his practices or his record. Every executive should be treated the same way as the lowest employee. Executives, even CEOs, should hired at will. Corzine managed to bring the share value of MF GLobal from $7 to $1.20 in less than two years. People have been fired for a lot less. And instead of golden parachutes (which Corzine denies getting; he prefers the term severance package), they should get standard severance (two weeks pay for each year on the job), ten minutes at the end of the workweek to clean out their desk (under supervision) and an escort out the door.