Forum Post: MF Global And Jon 'Superman' Corzine

MF Global And Jon 'Superman' Corzine

http://dailybail.com/home/chris-whalen-mf-global-and-jon-superman-corzine.html

By Chris Whalen

There have been a number of good analyses of the MF Global collapse and the role of “repo-to-maturity” trades in the failure. See “MF Global and Repo Accounting,” http://blogs.smeal.psu.edu/grumpyoldaccountants/archives/375 ...which also has links to Felix Salmon and several other good posts. Read Yves Smith’s comment on Lehman Brothers... http://www.nakedcapitalism.com/2010/03/ny-fed-under-geithner-implicated-in-lehman-accounting-fraud.html ...from last March as well.

But one of the things that most people seem to miss in this fiasco is the role of off-balance-sheet or OBS accounting in making the failure of MF Global a reality and, in particular, what it implies for other, larger banks.

Many observers say that the FASB erred by not “fixing” the OBS issue via disclosure, but in fact we need to eliminate OBS treatment of all assets, period. Indeed, the MF Global failure suggests that the US and EU banking systems may be facing a far larger problem than even the most bearish analysts suspect.

First let’s ponder a recent report by the International Swap Dealers Association or ISDA. A post on RiskCenter summarizes the findings:

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