In yesterday’s WSJ we saw yet another article regarding MF Global Holdings and its former CEO, Jon Corzine (“MF Probe Targets Back-Office Unit“) . This time we learn that just about everyone in the company has been interviewed by federal prosecutors, save for the Honorable former Governor of the great state of New Jersey, and a few other former seniors from the firm.
In the spirit of “full disclosure” I must confess that as a resident of the Garden State, I did not vote for Corzine when he ran for Senator or Governor, and my reasons aren’t because he is a Democrat, as I have been known to vote for several Democrats, including the member of the House of Representatives (Rush Holt) who represents my district. It is one thing to persuade lots of people to make significant donations to your campaign, as Barack Obama and many others have done; it’s another to spend millions of your own dollars to buy a Senate seat and Governor’s position. Perhaps he was fired from Goldman Sachs for a reason. His performance as a U.S. Senator was one with no notable accomplishments, and as Governor, his performance was so bad that this predominantly Democratic state voted him out (something that rarely occurs).
It has been reported that Corzine, when confronted by MF Global’s risk officer (who no doubt was paid a sizable amount to guard the firm against taking unnecessary risks) about his desire to invest so much of the company’s funds in sovereign debt, said something to the effect of “if you won’t let me do this, I’ll quit!” At least somewhere in the WSJ I recall reading something to this effect, as incredulous as this may sound.
I am blessed with two beautiful grandsons. But I have confidence that their father (my older son) and their mother (my lovely daughter-in-law), if talked to in a similar fashion, wouldn’t budge. But no; not in this case. A CEO who throws the equivalent of a tantrum is told “okay, go ahead.”
Risk managers are hired and risk controls are implemented for very good reasons; and one would think that the CEO, who as spent decades on Wall Street, would know as much, respect them, and even serve perhaps as an example in honoring them (so much for the “honorable”).
Risk remains a very difficult subject to get our arms around. Risk managers, risk officers, risk controls, risk management rules, etc. are necessary; they must be honored, respected, and ahered to.