MF Global ties awkward for Obama campaign
By T.W. Farnam,
The bankrupt financial company MF Global, now under federal investigation for possibly misusing clients’ money, is one of the top sources of contributions for President Obama’s reelection, complicating the campaign’s effort to turn public anger at Wall Street into a political advantage.
Employees of the company have given $108,650 to Obama’s campaign and the Democratic National Committee, according to federal records. MF Global’s chairman and chief executive, former New Jersey governor Jon Corzine, has raised at least $500,000 for the campaign and the DNC as a “bundler,” or volunteer fundraiser.
Mitt Romney is the only other major presidential candidate who reports receiving money from an MF Global employee, listing a $2,500 check from a company trader based in Stamford, Conn.
MF Global declared bankruptcy Monday, becoming the first U.S. victim of the European debt crisis. The FBI plans to conduct a preliminary probe into reports that hundreds of millions of dollars are missing from client accounts, federal law enforcement officials said.
The situation shows the political risk of relying on big money bundlers who can collect checks from friends and colleagues. Trouble can often rub off on candidates when they’re getting help from powerful public figures. Obama’s campaign has released a list of 350 bundlers who have raised at least $50,000, including 40 who have raised more than $500,000 each.
MF Global did not return a request for comment. A company attorney said in a recent bankruptcy court hearing that the company was not aware of any missing funds.
Obama campaign spokesman Ben LaBolt said in a statement that the president has been tougher on Wall Street companies than the Republican opposition.
“While the president passed Wall Street reform to combat risky financial deals that put our entire economy at risk,” LaBolt said, “Mitt Romney and the Republican candidates would let Wall Street write its own rules again no matter what the consequences for middle class families.”
The Obama campaign said it would return contributions from any MF Global employees, including Corzine, if they are charged with crimes related to the company’s collapse.
A Romney spokeswoman declined to comment.
MF Global recently made a bond sale with an unusual clause, saying the interest rate on the bonds would rise 1 percent if Corzine ended up being appointed to a post in the Obama administration. There has been speculation that he could be in line for Treasury secretary if the president is reelected.
The president has voiced support for recent protests against the financial industry and his campaign aides have said they plan to use the Occupy Wall Street movement to help build momentum for his reelection.
“I think it expresses the frustrations that the American people feel,” Obama said in a news conference last month. “The protesters are giving voice to a more broad based frustration with how our financial system works…. The American people understand that not everybody’s been following the rules, that Wall Street is an example of that.”
Obama held his first New York fundraiser for the reelection campaign at Corzine’s home on Fifth Avenue in Manhattan, overlooking Central Park. Guests gave the maximum $35,800 donation to Obama and the DNC.
Obama’s links to financial companies don’t end with MF Global. The president has raised $15.6 million from the financial industry for his reelection effort and the DNC, according to a Washington Post analysis.
The third-largest source of cash for Obama is Chicago-based Chopper Trading, which employs a controversial high-frequency trading technique. The firm’s chief executive, Raj Fernando, held a fundraiser at his home with Vice President Biden and has raised at least $200,000 for the campaign and the DNC.
A federal study of the 2010 “flash crash,” when the stock market briefly lost $1 trillion in value only to recover shortly thereafter, placed the blame squarely on high-frequency trading technologies like those employed by Chopper. Other studies have cited high-frequency trading, which now accounts for more than half of all trades, as contributing to stock market volatility. A company spokesman did not return a request for comment, but defenders of the industry dispute those studies.
Obama has raised $48,572 from Credit Suisse employees. The bank’s Swiss parent company is under investigation for allegedly helping Americans avoid taxes with offshore accounts. The bank is at top funder of Romney’s campaign, with workers donating $180,250.
Staff writer Jerry Markon contributed to this report.