Obama's Wall Street Donor Hypocrisy

Obama donor and former Gov. Jon Corzine has a murky corporate past that is being ignored.

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In this Dec. 13, 2011 file photo, former MF Global Holdings Ltd. Chairman and CEO Jon Corzine testifies on Capitol Hill in Washington before the Senate Agriculture Committee. Corzine is set to appear Thursday afternoon, Dec. 15, 2011 before the House Financial Services Oversight and Investigations Subcommittee.

Virtually every day, the Obama campaign tries to cast his opponent as some type of modern day robber baron. Gov. Mitt Romney's clear success in the private sector is a threat to President Barack Obama's attempt to sell the American public on another four years of dismal economic performance. Yet, when it comes to raising money for his own campaign, the president doesn't seem to blink about the source.

Case in point: former New Jersey Gov. Jon Corzine.

Corzine, the disgraced former CEO of MF Global, continues to aid the Obama campaign as a "bundler": a well-connected person who shakes down their moneyed friends for donations. To date, it appears that he has raised $897,232 for the cause. 

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While you will never hear this from "camp Obama" (my new term encompassing both the campaign and the administration), Jon Corzine made far more money than Mitt Romney ever did. Corzine was a senior partner at Goldman Sachs. He worked for them before the company went public, and his resulting fortune was estimated to be somewhere between $350 and $500 million. For those who don't think success should be punished, there is no problem with this narrative so far. Obama's problem is that he has spent much of his time vilifying those who are successful, even going so far as to discount our nation's small business owners. It has reportedly made some of his past high-dollar donors uncomfortable and, unfortunately for camp Obama, the Corzine story doesn't end with Goldman Sachs.

After being given the boot from that job, he decided to run for office, spending a record-shattering $62 million on his bid for the U.S. Senate—more than the $42.3 million Romney sunk into his 2008 presidential campaign. Corzine served one unremarkable term as a Democratic U.S. senator from New Jersey, but found it to be a difficult place for a first-timer and ran for governor in 2005 instead. 

Throughout his term as governor, Corzine frequently pondered the idea of one day running for president, despite the fact that he confronted none of the state's pressing problems and left the state with an $8 billion budget deficit. Corzine failed to win a second term as governor and left office with a miserable 37 percent approval rating . 

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So he made another exit, back to the world of finance. Corzine took on MF Global, a down-on-its-luck commodities brokerage. While reorganization and streamlining operations are part of turning most companies around, Corzine entered into this aspect of the job with enthusiasm bordering on zeal. Right off the bat, he sacked 1,400 people and replaced them with higher-priced Wall Street talent.   

MF Global was where Corzine was set to have the greatest meltdown of his career. The firm played fast and loose with investors' funds, setting up an elaborate shell game involving a $6 billion gamble on Eurozone sovereign debt. It was attractive to investors at the time because they knew it was risky enough to make a huge profit; they were unwilling to believe that it was risky enough that the underlying assets would eventually go into default. At some point, everything imploded and $1.2 billion went missing. The money was not missing in the "profits and loss" sense, rather the money was missing as in lost. They didn't have it and probably never had; investors had apparently been misled, and were left hanging. 

So why hasn't there been a greater outcry over the scandal?

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Being somebody who was once individually worth half of a billion dollars and used to be the governor of a densely-populated U.S. state gives you some clout. It also helps that MF Global was a client of a law firm that used to employ Attorney General Eric Holder and several other current Department of Justice employees, and that its bankruptcy proceedings are being overseen by another crony capitalist connection. Now, it is a fact of D.C. life that high-ranking political appointees at executive branch agencies and departments eventually want to return to their more-lucrative private sector jobs. That challenge becomes more difficult if they come out hard against former clients. The fact that Corzine has directed millions at Obama's two presidential campaigns can't hurt either. So in all reality, there will be few consequences other than personal humiliation for the people who somehow lost track of $1.2 billion in shady accounting scheme. 

President Obama has talked a tough game about holding Wall Street accountable and defending the middle class, but his administration has actually done very little to prosecute even the worst offenders. Financial fraud prosecutions are down 39 percent since the Enron and Worldcom scandals, hitting 20-year lows. During similar crises, such as the S&L scandal in the early 1990s, thousands of prosecutions were brought against the financial industry. 

Corzine is the real Gordon Gekko of the business world—but he's a Democrat who has raised almost $900,000 for Obama. And where is Occupy Wall Street? Not following Corzine around as he enjoys another summer in the Hamptons, but railing against the injustices of Saks 5th Avenue. One would hope that this time their rallying cry might be, "This is what hypocrisy looks like!"

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  • Corrected on 7/31/12: An earlier version of this post incorrectly characterized the missing $1.2 billion as resulting from illegal actions.