Sarah Palin was right. On this and so many things.
You’d think that after the Lehman debacle, all that would have changed. In fact, you’d think that would be practically the first thing to be changed — not credit-card swipe fees or executive-compensation rules or any of the rest of it. But it wasn’t. Corzine’s firm, MF Global, used something called “repo to maturity” — basically Repo 105 with a facelift — to accomplish the same goal: making the books look better by hiding bad assets, in this case a bunch of losing investments in European government bonds. The bigger problem is that while MF Global was both acting as a broker for its customers and making its own bets, it failed to keep the customers’ money segregated from its own, which is why some $600 million in customers’ money went missing. Now there’s a whole bunch of people wanting to get paid back and not enough money for everybody to get made whole, and the big Wall Street banks want to make sure that they’re first in line, with the government rewriting the rules of bankruptcy to put them ahead of the local-yokel customers out in the sticks. If you don’t think that the government can just arbitrarily rewrite the bankruptcy rules to suit its political preferences, revisit the General Motors bailout, when it did just that, shortchanging bondholders in favor of the union goons who act as Democratic footsoldiers and dues-collectors.
“At the risk of oversimplifying it,” one Wall Street insider explains, “imagine a bank went bankrupt. Then the regulators came in and cracked open all the customers’ safe-deposit boxes, even though they knew for certain that none of the contents belonged to the bank. Then they tossed those assets into the pile for the creditors to pick through and told the box holders to get in line as well. That’s what folks are saying is happening here. And in a situation like that, who wants a safe-deposit box?”Related posts: The making of an anti-Romney, MF Global Mucks Up Heartland, Bill Clinton Tied to Corzine's MF Global Fiasco, Jon Corzine STOLE the customer cash at MF Global, Romney's Bridge on the River Kwai