Thursday, August 04, 2011

Jon Corzine To Replace Timothy Geithner? Or Is It Just Another Scam By Dirty Jon?

It's hard to believe that Barack Obama  - who spends most of his waking hours, and God know how many of his sleeping ones, decrying Wall Street hedge-funds managers and billionaires - would appoint a  billionaire Wall Street hedge-fund manager to replace Time Geithner at the Treasury.  But Corzine has been a good little boy, helping to bundle mega-bucks for the boss, and there's been rumors for a while of a tit-for-tat if Crooked Jon came across with some fat cash.  Which he has.

The New York Times reported this little oddity on Tuesday:

Is Jon S. Corzine on the short list to replace Timothy F. Geithner as Treasury secretary?

A preliminary prospectus filed on Tuesday by MF Global, where Mr. Corzine, the former Democratic governor and senator from New Jersey is now chief executive, suggests that just may be a possibility.

MF Global is planning to sell five-year notes on Tuesday with an unusual twist: the notes will pay an extra 1 percent in the interest rate “upon the departure of Mr. Corzine as our full time chief executive officer due to his appointment to a federal position by the President of the United States and confirmation of that appointment by the United States Senate prior to July 1, 2013,” according to the offering. The higher possible rate reflects how important investors consider Mr. Corzine to be to MF’s prospects and pays them taking the risk that he might leave.

Is Corzine really on the short list, as this disclaimer seems to imply, or is this just flypaper for suckers, luring them to think IMF Global must be all that as their CEO could likely be the nation's next Treasury Secretary?

Like all things Corzine, upon further review, even this guarantee of additional returns turns out to be a shit deal. The Times follows up today with a healthy dose of skepticism:

Investors will get an extra one percentage point of interest on the firm’s $300 million bond deal. That might sound encouraging. After all, bondholder activism is worthy of encouragement. But this key man clause seems to benefit Mr. Corzine’s image more than creditors.’s hard to see how one executive’s departure for another, noncompeting job would undermine a firm’s creditworthiness.

But let’s assume it did. In that unlikely event, bondholders would share among them an extra $3 million a year. That hardly constitutes adequate recompense for increased risk. What’s more, if lenders really are concerned about the consequences of Mr. Corzine’s departure, they should be insisting on a clause in the debt deal that covers every eventuality, not just the possibility that President Obama might ask him to run the Treasury Department, which is what the deal document essentially implies.

....The Corzine covenant is at least good public relations for MF Global and its boss. But as protection for bondholders, it’s pretty much meaningless.

Much like all the patchwork budgets that Corzine put together as governor of New Jersey, nearly sending the state into bankruptcy before getting his ass handed to him by a state with a huge Democratic registration advantage.

I'm not sure if a beaten and bloodied Obama would want to even try to push the tarnished Corzine through the Senate at this point. Seems to me as if Corzine is trying to create a buzz around himself, both to help his fundraising for Obama and to help line his pockets with fool's gold - the gold of the fools who really believe Corzine's name has any type of monetary value attached to it whatsoever.

But Obama does own Dirty Jon something, I suppose. Perhaps an ambassadorship to Luxembourg is more in the cards for the erstwhile governor, notorious for sleeping with union heads while negotiating with them. Seems to me that as he couldn't even handle New Jersey, Jon needs to start at the bottom, and prove his mettle, before he's allowed any more big-boy toys...

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