Former U.S. senator Jon S. Corzine, who presided over the collapse of commodities brokerage MF Global, returned to Capitol Hill Thursday and rebutted an allegation that he knew about loans the firm made using customers’ money.
For the third time in a week, the New Jersey Democrat and former governor testified before lawmakers probing how an estimated $1.2 billion of customers’ money ended up missing.
As he did in prior appearances, Corzine said he did know. He also countered testimony that might have undermined that position.
At a hearing before a Senate committee Tuesday, Terrence A. Duffy, executive chairman of the commodities exchange operator CME Group, said a CME auditor participated in a phone call with senior MF Global employees in which one of those employees “indicated that Mr. Corzine knew” about loans from customer accounts.
Appearing before an investigative subcommittee of the House Financial Services Committee Thursday, Corzine said he didn’t know “how to respond to something that somebody said to somebody else to somebody else that is unidentified.”
But he tried.
“While the last few days of MF Global were chaotic, I did not instruct anyone to lend customer funds to MF Global for any of its affiliates, nor was I told that anyone had done so,” he said.
Corzine said Duffy might have been referring to problems Corzine encountered days before MF Global sought bankruptcy protection, when he was trying to raise cash by selling billions of dollars of securities.
He said J.P. Morgan Chase told him that it would not engage in those transactions until overdrafts in London were cleaned up. Corzine said he asked the firm’s back office in Chicago to resolve the problem.
Later that day, J.P. Morgan Chase contacted Corzine again and said it needed assurances that the transfer of funds did not violate federal rules, Corzine said. Corzine said MF Global’s Chicago staff “explicitly confirmed to me that the funds were properly transferred, and I understood that J.P. Morgan Chase was satisfied, since they executed . . . billions of dollars of trades with MF Global.”
“I do know that I never authorized anyone to use customer funds to make a loan or a transfer of funds, I never intended to, nor do I think I said anything that could have been construed to do that,” the former chairman and chief executive of MF Global testified.
While some lawmakers have treated the former senator gently in his appearances over the past week, some members of Thursday’s panel took off the gloves.
Rep. Bill Posey (R-Fla.) asked Corzine if any of his assets or his passport had been frozen.
“No, sir,” Corzine said.
Rep. Steve Pearce (R-N.M.) mocked Corzine’s apologies and his statements that he sympathizes with MF Global customers hurt by the bankruptcy.
“What hotel are you at here in the city?” Pearce asked, repeating Corzine’s barely audible answer: “The Ritz Carlton — did I hear it correctly?”
“How many of the 36,000 clients that were defrauded have you called personally?” Pearce asked.
“None,” Corzine said.
Alluding to the fortune Corzine made as head of Goldman Sachs, Pearce asked, “Have you created a scholarship for any of the families that have been disadvantaged, people just to help them out with maybe their college funds? Yes? No?”
“Congressman, the answer is no,” Corzine said.