Forum Post: WSWS: The MF Global collapse, the Democratic Party and Wall Street

from today's World Socialist Web Site Perspective:

The MF Global collapse, the Democratic Party and Wall Street

The collapse last week of US broker-dealer MF Global has put the spotlight on the parasitic speculation and outright criminality that are at the heart of the US financial system. It has also provided a text book example of the corrupt and incestuous relationship between the American financial aristocracy and both the political system in general and the Democratic Party in particular. ...

Corzine was CEO of Goldman Sachs from 1994 to 1999, precisely the period when the dismantling of corporate and banking regulations—which had begun under the Democrat Carter and expanded under the Republicans Reagan and the elder Bush—was completed under the Democrat Clinton. Corzine left his Wall Street post with a reported fortune of $400 million. He proceeded to spend $62 million of it to get himself elected US senator from New Jersey.

In 2005 Corzine spent another $38 million of his own money to win election as governor of New Jersey. As governor, he imposed brutal cuts in health care, pensions, higher education and aid to the cities, as well as slashing 5,000 state jobs. As a result, he lost his reelection bid in 2009 to right-wing Republican Chris Christie, who has expanded the assault on New Jersey workers.

When Corzine returned to Wall Street the following year he was given royal treatment by government regulators. The president of the Federal Reserve Bank of New York, William Dudley, another Goldman Sachs veteran, gave MF Global entry into the exclusive and lucrative club of “primary dealers”—financial firms chosen to market US Treasury securities. This was despite MF Global’s relatively small size and the fact that it had been fined $10 million one year before as a result of a trading scandal.

When MF Global’s primary regulator, the Commodity Futures Trading Commission (CFTC), moved to impose stricter limits on broker-dealers’ use of clients’ funds, especially to invest in foreign sovereign debt, Corzine lobbied personally against the regulation. Earlier this year, Gary Gensler, the head of the CFTC, suspended implementation of the new rules.

Gensler is another Goldman Sachs graduate, having worked with Corzine at the firm for 18 years, rising to become co-head of finance before leaving in 1997. Gensler has been forced to recuse himself from the CFTC investigation into the MF Global collapse.

Corzine also exemplifies the seamless ties between Wall Street and the Obama administration. A major fundraiser for Obama’s reelection campaign, the now-disgraced banker-politician hosted the president’s first fund-raising event at his Fifth Avenue apartment overlooking Central Park. He was expected by many to be named treasury secretary in a second Obama term.

http://wsws.org/articles/2011/nov2011/pers-n08.shtml