Jon Corzine’s remarkable descent

Correction: An earlier version of this article misstated the year in which Jon Corzine was ousted from Goldman Sachs. It was 1999, not 1994. This version has been corrected.

November 2, 2011

In April, Jon Corzine hosted President Obama at his home in Manhattan for the first fundraiser of the president’s re­election campaign. To many power brokers in Washington and on Wall Street, the event signaled Corzine’s desire to return to Washington, perhaps even as Treasury secretary during a second Obama term.

“Obviously,” said Richard Codey (D), a fellow former governor of New Jersey, “that’s not going to happen.”

This week, Corzine’s firm, MF Global, a commodities and derivatives brokerage house, imploded in a spectacular fashion, completing the onetime Wall Street and Washington grandee’s remarkable descent.

The former Goldman Sachs chief executive, U.S. senator and New Jersey governor had hoped to rebuild the fund into a career-burnishing launching pad for his return to the rarefied world of high finance, or perhaps public service.

Instead, it proved to be a diving board to new depths. Not only did the firm file for bankruptcy protection after the damaging revelation of its possession of potentially toxic European sovereign debt and bonds, but the company is also being investigated after allegedly violating industry regulations by using customer money to cover its long-shot bets. And it doesn’t look great that Corzine built a $12.1 million golden parachute into his contract.

“He has got to hang up his spikes,” said Ross Baker, a political scientist at Rutgers University. Baker said any sort of government position that required a confirmation hearing would now focus attention on his firm. “Especially given that he seemed to be risking other people’s money.”

The loss to Republican Chris Christie in the 2009 governor’s race effectively ended the New Jersey political career of Corzine, who did not respond to a request for comment. But Codey expressed a view held by many members of the state’s political establishment, that Corzine held out hope for an eventual reputation-restoring post in the Obama administration.

“If this works out and Obama wins,” Codey said, “maybe he gets a good post and it’s a comeback and a way to finish off a legacy.”

Not everyone is convinced that Corzine wanted back in.

State Sen. Raymond Lesniak, a Democrat from Union County, said he had dinner with Corzine in May after the Obama event and received no indication that Corzine wanted to return to Washington. He said Corzine was mostly excited to “be back in the business world and out of Jersey politics,” and he interpreted Corzine’s fundraising for Obama as a way to satisfy his “public service gene.”

According to White House officials speaking on background, Corzine’s résumé has the qualifications necessaryto make the Treasury secretary short­list were Timothy F. Geithner to leave, but the latest development is a major setback.

“The collapse is total,” said one early and influential Corzine backer who requested anonymity in order to speak frankly. “The positive qualities when you run for office, taking big risks, can make you a hero. But in other circumstances, it can be a source of mass destruction.”

Taken in the aggregate, Corzine’s up-and-down career path resembles a cosine wave. After making millions as chief executive of Goldman Sachs, he was ousted in 1999 and replaced by Henry Paulson, who eventually became Treasury secretary to George W. Bush. But Corzine regrouped and ran an impressive outsider campaign in 2000 — spending nearly $60 million of his own money — for one of New Jersey’s U.S. Senate seats. After five years in Washington, he decided to leave the Senate to run for New Jersey governor.

“He told me once that by the time he would have any influence in the Senate, he’d be in his 80s,” Baker said.

The New Jersey political establishment, including Codey, was not pleased with the move, but Corzine did it anyway, taking the governor’s mansion in 2006. A year later, Corzine’s sport-utility vehicle, racing at about 90 mph to an interview with radio personality Don Imus, hit another vehicle, severely injuring the governor, who was not wearing a seat belt. By the time the reelection campaign rolled around, many New Jersey politicians questioned his commitment, and reports circulated that he had appealed to the Obama administration for a post that would allow him a graceful exit. That didn’t come to pass, and, in 2009, Corzine lost badly to Christie. After that, he seemed to vanish.

“He seemed to move out of state,” Codey said. “He had no desire to run for public office again.”

To make matters worse, the Securities and Exchange Commission brought a fraud suit against Goldman, casting doubt on many of the firm’s practices under Corzine’s leadership. It was in that down-and-out context that Corzine came in March 2010 to MF Global, which had survived a scandal in 2008 connected to a trader’s making unauthorized bets. Corzine told reporters at the time that Goldman, too, was a smaller firm when he started there and that he viewed MF Global as a tremendous opportunity. Wall Street seemed to agree. The company’s stock went up 25 percent in the months after he joined.

But no one realized just how big a bet Corzine was willing to make.

People close to Corzine, who was known to make trades himself at the firm, said that they warned him about the dangers of acquiring European debt but that he shrugged them off. That extreme self-confidence was well known among his peers, but one confidant of Corzine’s balked at “this level of risk. It’s indefensible.”

As his firm’s bankruptcy filing, and his own collapse, became public this week, the news reverberated across the many spheres with which Corzine had come in contact. People on Wall Street gaped, remarking that the allegations seemed more representative of trading practices in the early 1990s. Back on main street, in Corzine’s home town of rural Taylorville, Ill., friends were just as taken aback.

“I was probably as shocked as anybody when this came over the news,” said Jack Mazzotti, a friend from high school whom Corzine flew to Washington for his swearing-in as a senator. “This is not Jon Corzine. There’s got to be a story behind this.”

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