I’ve said for a while that the Occupy Movement is a revolution that ultimately seeks, among its goals, return to the rule of law. Return to the rule of law is revolutionary at this point in our history — if you’re high enough in the top 1% (the Top 0.1% will do it), the law won’t touch you.
Now comes Jon Corzine. He went from lowly bond trader to CEO of Goldman Sachs, to U.S. senator, to governor of New Jersey, to CEO of MF Global, a brokerage and investment shop (that is, it was a broker house with brokerage customers, and also an investment outfit that traded for its own account).
That’s all the background you need to understand the unfolding MF Global scandal. I’ll give you some links to follow the details of that scandal — like the Penn State story, there’s new news every day — so I can get to my main point.
The short strokes are these.
■ MF Global was a “sleepy brokerage firm” that Jon Corzine turned into a combo brokerage-and-investment shop.
Soon after joining the firm in 2010, Mr. Corzine moved to transform the sleepy brokerage firm into a full-service investment bank in the mold of his former employer, Goldman. He aggressively bought up the bonds of troubled economies like Italy, Ireland and Spain, betting that the Continent would not let the countries default on their loans.
■ As noted above, MF Global thus held both customer money and its own money, which it invested for its own account (think hedge fund).
■ They bet heavily on European sovereign debt and lost big:
The firm declared bankruptcy at the end of October after a number of bets on derivatives contracts went wrong amid the European financial crisis. It was the biggest collapse of a financial firm since Lehman Brothers went bust in 2008.
■ They couldn’t find all the customer money (about three quarters of a billion dollars).
■ They still can’t.
Did Corzine use customer money to cover his Europe bets? Matt Taibbi and ZeroHedge think yes:
How about that Jon Corzine, eh? It seems New Jersey’s finest self-bought ex-Senator (and governor) bet heavily on European debt, got walloped by a cavalcade of AIG-style collateral calls streaming in from outraged creditors, and tried to stave off the inevitable by commingling client cash with his own account.
If he did, that’s got to be a crime. Customer money is customer money; it’s not yours to use except as directed (by customers). A broker needs power of attorney to trade with customer money without permission.
But will Corzine ever be indicted? I suspect the odds are against it. First, he’s a top Obama fundraiser.
And that’s my point. The Constitution is not just what’s written; it’s also what’s practiced. Bipartisan agreement — for example, agreement to torture and not to punish torture — works like an interpretation, and that gets folded in. Bush wasn’t indicted; Cheney wasn’t indicted; bankers weren’t indicted; CEOs aren’t indicted; Murdoch won’t be indicted (in the U.S.). Gonzales was Bush’s made man. Holder is acting like Obama’s.
By those lights, the current U.S. Constitution allows the Top 0.1% to act like a criminal enterprise. For them, the rule of law does not apply. (Obama has unilaterally ordered the execution of an American citizen. Is that constitutional? It is now.)
Will Jon Corzine ever be indicted, so that the evidence against him can be presented to a jury?
He’s Top 0.1% in spades: a Goldman CEO, a senator, a governor, and a major Dem fundraiser in an election year.
If he does see a jail or a courtroom, it will be revolutionary.