Friday, November 4, 2011

NYT: Gov. Corzine Used Leverage To Keep Government Regulators From Investgating MF Global Fund


Ed Morrissey - I considered adding this to my earlier post about Jon Corzine and Barack Obama, but both the story and its source deserves attention all on its own.  The New York Times reports today that Corzine pushed regulators away from a rule change that would have exposed MF Global’s risky and perhaps illegal business practices:
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 ofGoldman 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.
How did Corzine manage that?  It was apparently between the Democrats in the regulatory state:
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. …
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.
Lehman Brothers actually pushed for the existing rule in 2005, which had the unintended effect of allowing firms to use repurchase agreements to hide losses in the short term.  That’s how Lehman’s collapsing financial state escaped notice for as long as it did, as they hid billions in losses.  That is why Gensler proposed the rule in the first place, but Corzine insisted that the rule change wouldn’t actually do anything for greater transparency on compliance.
Mona Charen notes that this makes Barack Obama’s attack on Republicans look more like a case of projection:
That’s Obama’s caricature of Republicans, whereas under his enlightened leadership, those selfish malefactors are under strict regulatory control. Note then today’s NY Times story (sorry I’m on train and insert link) saying that when regulators were looking askance at MF Global, the influence  of Jon Corzine, Democratic poobah, was sufficient to call them off. So much for the regulatory state. Combine this with Solyndra and you get regulation and corruption to spare!
Hey, it’s not as if Corzine didn’t earn his influence in Washington.  He got it the old-fashioned way … he bought it.  Unfortunately for Democrats, we all still have the receipts.

New Herman Cain Super-Pac AD: "High Tech Lynching" In America


Ed Morrissey - All this week, the Cain campaign and his supporters have linked his travails to Clarence Thomas’ experience at the Senate confirmation hearings twenty years ago; now a Cain super-PAC is making it official with their new web-only spot, “High-Tech Lynching.” The name comes directly from now-Justice Thomas’ rebuttal to sexual harassment allegations that popped up out of nowhere when Anita Hill testified in the Senate. Conservative outrage has not dimmed from that Howard Metzenbaum-sponsored spectacle, and the super-PAC clearly wants to channel it to his defense now:
There are a couple of differences between the two situations, however.  Anita Hill came forward publicly; none of Cain’s accusers have done so, and the media has shielded all of their identities, at least so far.  On the other hand, the National Restaurant Association actually received some complaints (of a thus-far nebulous nature) contemporaneous to alleged incidents, while Hill — an attorney — not only didn’t lodge complaints, she continued working for Thomas.  Whether one calls these severances or settlements, the incidents resulted in exits from NRA, along with cash, although as my friend John Hinderaker points out from an attorney’s point of view, the amount of cash is not terribly impressive:
 Frankly, hard as this may be for many people to understand, $40,000 in the context of lawsuits is chump change. Amounts of this sort are constantly paid to people who had lousy claims, at best, and who were almost certainly lying. It is conceivable that someone, somewhere, could have had a valid claim against Herman Cain. But the fact that the National Restaurant Association paid amounts in that range to disaffected employees to get rid of them and obtain a release proves nothing.
For conservatives, the concern now reflects more on the disorganized and contradictory response from the Cain campaign, even with the 10 days’ notice that Politico ended up giving them that a story was in the works centered on allegations of impropriety at NRA.  Cain himself has updated his recollections a couple of times when the campaign should have had all the facts available from the beginning, and over the last couple of days seems confused whether they’re still accusing Curt Anderson of being the source.  For a man whose campaign is based on his ability to solve problems, Republican primary voters don’t have much reason for confidence after seeing Team Cain flounder this week.
Cain has a good opportunity tomorrow to change the narrative with his “Lincoln-Douglas” style debate in Texas tomorrow with Newt Gingrich.  Gingrich won’t bring up these charges, one can be sure, because he’s trying to promote this format as a means to escape “gotcha” politics and get back to substance.  If Cain can hold his own in this two-hour-plus debate, by Monday he may be able to put all of this behind him — as long as no more revelations arise.
The latest Washington Post poll tends to corroborate that analysis.  Pay special attention to the last sentence in this excerpt:
Businessman Herman Cain and former Massachusetts governor Mitt Romney are running nearly even atop the field of 2012 GOP presidential hopefuls, a new Washington Post-ABC News poll shows, with most Republicans dismissing the harassment allegations that over the past week have roiled Cain’s campaign.
Seven in 10 Republicans say reports that Cain made unwanted advances toward two employees when he was head of the National Restaurant Association in the 1990s — allegations which have been stiffly rebutted by Cain’s campaign — do not matter when it comes to picking a candidate. …
The poll was conducted Oct. 31 through Nov. 3, starting the evening after Politico first reported the harassment allegations. Support for Cain was basically steady over the four nights of interviewing, even as new charges against him surfaced.
That may not last forever, but it also may be that most people don’t take these charges seriously as an obstacle to a nomination.  Perhaps that will change if more details arise, but the vague, second-hand nature of the allegations have most Republicans giving Cain the benefit of the doubt, and that doesn’t change with the addition of more vague allegations.  If the campaign can right itself and demonstrate better crisis-handling skills, this could pass in the next few days.
Update: The spot does not come from the campaign, but from the super-PAC 999 Fund.  I’ve corrected the lead paragraph to reflect that.  I also changed the post headline.