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Getbig Main Boards => Politics and Political Issues Board => Topic started by: Soul Crusher on November 03, 2011, 02:00:55 PM
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Regulator gave $10k to NJ Dems as Corzine ran for Governor of New Jersey in 2005
Yahoo ^ | 11/3/11 | Daniel Wagner - AP
WASHINGTON (AP) -- The regulator overseeing the investigation of Jon Corzine's collapsed securities firm, MF Global, gave $10,000 to the New Jersey Democratic Party in 2005 as Corzine ran for governor of that state.
Gary Gensler, chairman of the Commodity Futures Trading Commission, and Corzine had worked together for 18 years at Goldman Sachs Group Inc. and later collaborated to pass a law to combat corporate fraud.
Election records show Gensler gave the money in August 2005. Corzine, a Democrat, was elected governor later that year.
MF Global filed for bankruptcy protection on Monday. Gensler and other regulators are trying to find out what happened to hundreds of millions in clients' money that went missing last week.
Gensler's long history with Corzine poses an apparent conflict of interest that could taint the probe's findings, experts say.
"The appearance of a conflict is there, there's no question," said Jay Lorsch, a professor at Harvard Business School. "It might be wise for Mr. Gensler to recuse himself from this particular investigation."
Gensler rose to become Goldman's co-head of finance before leaving in 1997. Corzine left Goldman in 1999, after serving as chairman and CEO.
(Excerpt) Read more at finance.yahoo.com ...
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December 19, 2008
Obama Names Insider to Commodities Post
By EDMUND L. ANDREWS
www.nyt.com
WASHINGTON — Nine years ago, Gary Gensler played a central role in fending off tough regulation for exotic financial instruments for hedging against risk. On Thursday, President-elect Barack Obama picked him for a central role in cleaning up the wreckage that some of those instruments caused.
Mr. Obama named Mr. Gensler, a former Treasury official under President Clinton, to take over a seemingly obscure backwater of regulation, the Commodity Futures Trading Commission.
But the commission, which regulates the exchanges that trade futures contracts for products as varied as oil, wheat and instruments for betting on interest rates, will be a major battleground over reining in the trillion-dollar markets for credit-default swaps and other “derivative” financial instruments that greatly aggravated the damage caused by the subprime mortgage meltdown.
In 1999, Mr. Gensler worked alongside Robert E. Rubin, then the Treasury secretary under President Clinton, and Alan Greenspan, then the chairman of the Federal Reserve, to block proposals by the commission to regulate the new instruments.
In the past year, as the mortgage crisis metastasized into a collapse of the broader financial system, instruments like credit-default swaps and so-called synthetic collateralized debt obligations produced hundreds of billions of dollars of losses that have forced the federal government to bail out the financial industry at a possible cost to taxpayers that could reach trillions of dollars.
Mr. Obama has vowed to reverse the deregulatory stance of the Bush administration and overhaul the entire system of financial supervision. Though Mr. Obama’s team has not mapped a specific plan, advisers on his transition team said reining in derivatives would be one of the biggest and most complicated parts of that effort.
Advisers to Mr. Obama said Mr. Gensler, 51, would bring immense expertise to the challenge and said it would be a mistake to think that he would oppose tough regulation just because he did so in the 1990s.
Mr. Gensler, who became a partner at Goldman Sachs at the age of 30, is a staunch Democrat who was a top adviser to Paul S. Sarbanes, then a senator, in drafting the Sarbanes-Oxley law in 2002. That law, which provoked howls of protest from business groups at the time and in the years since, imposed strict rules and oversight of corporate accounting after the bookkeeping scandals at companies like Enron and Worldcom.
“They were absolutely intent on writing a tough bill,” said Michael Paese, who was a senior counsel to Democrats on the House Financial Services Committee at the time and is now a lobbyist for the securities industry.
Other Democratic staff members on the Senate Banking Committee said Mr. Sarbanes and Mr. Gensler had been so worried about diluting the proposed regulations that they excluded Harvey L. Pitt, Mr. Bush’s chairman of the Securities and Exchange Commission, during most of their work to draft the legislation.
At the heart of the coming political battle are credit-default swaps, which are essentially insurance contracts to protect investors if a particular bond defaults. They were used to insure hundreds of billions of dollars worth of securities backed by subprime mortgages, but they also became a huge speculative tool in their own right.
As the subprime mortgage market reached a frenzied peak from 2005 through the summer of 2007, Wall Street firms used the swaps to create vast numbers of synthetic collateralized debt obligations, which were securities that modeled the performance of pools that contained real mortgage-backed securities.
When default rates on subprime mortgages soared in 2007, companies that had written credit-default swaps were potentially on the hook for hundreds of billions of dollars.
Mr. Gensler could not be reached for comment about how his views about financial regulation have evolved.
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hhhhmmmmm - why is ows not protesting this?
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Obviously Obama wants someone with no bias handling this case. After all, Corzine was Obama's pick as the next head of treasury.
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this is bullshit investigation. just like bush investigating himself for 911.
and unless you screamed about it then... nobody wants to hear you cry about this now :(
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this is bullshit investigation. just like bush investigating himself for 911.
and unless you screamed about it then... nobody wants to hear you cry about this now :(
::) ::)
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::) ::)
exactly. eye rolls = "shit, i got no response and i'm a little annoyed by it".
Of course this is a bullshit investigation. obama will probably oversee the F&F investigation "internally". Kinda like Cain's own ppl investigating the sexual harassment charges. ANY TIME a person controls those who investigate him - that's complete bullshit.
but then again, yall only complain when it's a bitch-ass lib doing it, I forgot... ;)
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exactly. eye rolls = "shit, i got no response and i'm a little annoyed by it".
Of course this is a bullshit investigation. obama will probably oversee the F&F investigation "internally". Kinda like Cain's own ppl investigating the sexual harassment charges. ANY TIME a person controls those who investigate him - that's complete bullshit.
but then again, yall only complain when it's a bitch-ass lib doing it, I forgot... ;)
How many times do I need to tell you I want another investigation?
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How many times do I need to tell you I want another investigation?
in that case, i was not talking about you. props for that.
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in that case, i was not talking about you. props for that.
Who doesnt want another investigation?
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this is bullshit investigation. just like bush investigating himself for 911.
and unless you screamed about it then... nobody wants to hear you cry about this now :(
Are you incapable of discussing a topic without making a moral equivalence or straw man argument? Shut the fuck up already. Thread derailing c*nt.
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Who doesnt want another investigation?
neocons
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neocons
Are pelosi and Bama neo cons?
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As Regulators Pressed Changes, Corzine Pushed Back, and Won
By AZAM AHMED and BEN PROTESS
Manuel Balce Ceneta/Associated Press
http://dealbook.nytimes.com/2011/11/03/as-regulators-pressed-changes-corzine-pushed-back-and-won/?nl=todaysheadlines&emc=tha2#preview
Jon Corzine, a former governor and senator, attended a dinner with his wife, Sharon, at the White House in June. Before MF Global’s collapse, Mr. Corzine was influential in Washington.Months before MF Global teetered on the brink, federal regulators were seeking to rein in the types of risky trades that contributed to the firm’s collapse. But they faced opposition from an influential opponent: Jon S. Corzine, the head of the then little-known brokerage firm.
As a former United States senator and a former governor of New Jersey, as well as the leader of Goldman Sachs in the 1990s, Mr. Corzine carried significant weight in the worlds of Washington and Wall Street. While other financial firms employed teams of lobbyists to fight the new regulation, MF Global’s chief executive in meetings over the last year personally pressed regulators to halt their plans.
The agency proposing the rule, the Commodity Futures Trading Commission, relented. Wall Street, which has been working to curb many financial regulations, won another battle.
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.Twitter ..Related Links•Complete Coverage: MF Global
.Yet with MF Global in bankruptcy and regulators scrambling to find $630 million in missing customer funds, Mr. Corzine’s effort may come back to haunt him.
The proposed rule would have restricted a complicated transaction that allowed MF Global in essence to borrow money from its own customers. Brokerage firms are allowed to use customers’ money to earn interest, not unlike banks, but this rule would have outlawed using customer funds for a loan to the firm itself.
While such financing is not unknown on Wall Street, it carries substantial risk. An outside lender would require a firm like MF Global to produce strict accounting for a loan. Without that oversight, regulators worried that firms could use such internal customer money inappropriately, including bolstering the business in hard times. The proposed rule would have affected several dozen other financial firms.
Regulators are now examining whether these transactions explain the missing money at MF Global, according to people briefed on the investigation.
The C.F.T.C. has issued subpoenas to MF Global’s auditor, PricewaterhouseCoopers, and the Securities and Exchange Commission is also conducting an inquiry. The Federal Bureau of Investigation is also looking into the missing money, although there is no indication that criminal laws were broken.
Still, Mr. Corzine has hired a prominent criminal defense lawyer, Andrew J. Levander, a partner at Dechert, according to people briefed on the matter.
Mr. Levander represented a number of Wall Street executives after the financial crisis of 2008, including the independent directors of Lehman Brothers and John A. Thain, the former chief executive of Merrill Lynch.
Neither Mr. Corzine nor MF Global has been accused of wrongdoing. MF Global declined to comment and Mr. Corzine did not respond to a request for comment.
Just three months ago, Mr. Corzine’s firm assured regulators that the proposed rule could cripple the futures brokerage industry by hurting their profitability. In a letter, MF Global told regulators that they were trying to “fix something that is not broken,” adding that the firm was not aware of any brokerage firm like itself that was unable to “provide to their customers upon request any segregated funds.”
MF Global’s clients, including hedge funds, individual investors and agricultural firms, now know a different reality, as the clients struggle to locate their missing funds. And regulators are pushing to again move forward on the rule. But for MF Global, the rule will come too late.
The trades at the center of MF Global’s downfall — big bets on the debt of five European countries — may yet prove profitable. But they raise questions about why the firm escalated its risk-taking under Mr. Corzine, leading to a crisis of confidence among rating agencies, creditors and regulators.
As a former sovereign debt trader at Goldman Sachs, Mr. Corzine wagered that the European regulators would backstop any default. So even as dark clouds circled over Europe, he sensed an opportunity. Starting in late 2010, MF Global began to accumulate short-term sovereign debt of countries like Italy, Spain and Portugal.
MF Global financed these purchases through complex transactions known as repurchase agreements. In these, the bonds themselves were used as collateral for a loan to purchase them. The interest paid on that loan was less than the interest the bonds paid out, earning the firm a profit from the spread.
While that practice is quite common, the C.F.T.C. wanted to crack down on such lending in those instances when customer funds were used. The C.F.T.C. proposal would have also banned the use of client funds to buy foreign sovereign debt.
It is unclear whether the firm used client funds to purchase the risky bonds of Italy, Spain, and other debt-laden European nations, but experts say it is not unusual for such transactions to be paid for with customer money.
A person close to MF Global said the firm did not use client funds to finance these trades.
Leading the government’s effort to curtail these arcane practices was Gary Gensler, the chairman of C.F.T.C., who had worked for Mr. Corzine at Goldman Sachs. Mr. Gensler pushed for the proposed change in October 2010, and planned to bring it to a vote this summer.
MF Global has four outside lobbyists in Washington, tiny by Wall Street standards. But it was Mr. Corzine who marshaled the firm’s response to the proposal, lobbying most of the agency’s five commissioners directly. One commissioner said he visited with Mr. Corzine in MF Global’s headquarters, and acknowledged being impressed by the Wall Street titan, said a person with direct knowledge of the meeting who asked for anonymity because the meeting was private.
The C.F.T.C. polices the markets for futures trades. Staff members there often do not have a Wall Street pedigree.
Mr. Corzine’s background in finance made him highly credible, agency officials said.
Mr. Corzine’s efforts culminated on July 20, as the agency was preparing for a vote on the proposal. That day, MF Global executives were on four different calls with the agency’s staff. Mr. Corzine himself was on two of those calls.
One of the calls was with Mr. Gensler. Both men are active Democrats, and served on financial panels together recently.
Shortly after the calls, Mr. Gensler, aware that he lacked the support to push the vote through, decided to delay the proposal indefinitely. He did so at the urging of Republican commissioners, according to people familiar with the matter.
But after MF Global’s blowup and the ensuing fallout from the missing funds, regulators said they were considering pushing again on the rule.
“I think it’s time to move ahead — expeditiously — and make that rule tighter, cleaner, and ultimately safer, for customers,” Bart Chilton, a Democratic member of the C.F.T.C., said in a statement.
Mr. Chilton also wants the agency to require firms to produce detailed documentation “to ensure that the funds are really there.”
Internal repurchase agreements emerged on Wall Street in 2005. At the time, the transactions were off limits to banks and brokerage firms. But at the urging of Lehman Brothers, a Republican-led C.F.T.C. blessed the new approach to getting financing.
In September 2008, Lehman collapsed amid a global financial crisis. It later was disclosed that Lehman’s use of another little-known repurchase agreement allowed it to temporarily obscure billions of dollars in losses.
Michael J. de la Merced, Andrew Ross Sorkin and Peter Lattman contributed reporting.