When Jon S Corzine joined MF Global last year it seemed like a strange choice ? the firm had none of the glamour, let alone the profits or footprint of Goldman Sachs, the bank he ran during the 1990s.
On Wall Street, it was as if a manager of the New York Yankees was making a comeback in the minor leagues.
Corzine, 64, who not only presided over Goldman but later served in the United States Senate and then as governor of New Jersey, seemed surprised himself.
?Don?t ask me any hard questions,? he joked to a visitor who met with him just days after Corzine took over in March 2010. ?I hadn?t heard of this company a week ago.?
Now, nearly everyone has.
MF Global, a commodities and derivatives brokerage house, collapsed on Monday in the biggest bankruptcy on Wall Street since the failure of Lehman Brothers. The firm imploded after a big investment in European bonds ? a bet he directed and defended as not particularly risky as recently as last week ? led investors, clients and ratings agencies to lose confidence in the firm.
The fall of MF Global, and the discovery that hundreds of millions of dollars were missing from the firm?s customer accounts, have now cast a dark cloud over Corzine?s legacy and reputation. Federal authorities have stepped up an inquiry into why the firm failed to keep its customers? money separate from the company?s ? a regulatory violation.
MF Global was supposed to be Corzine?s comeback vehicle after New Jersey voters turned him out in 2009. Instead, the collapse of the firm appears to be a humiliating coda to the career of a one-time titan of Wall Street.
His insistence on taking more risks, including buying the debt of European countries like Italy and Spain, along with a contract that would have provided him with an additional $12.1 million if he left the firm, paint a picture of excess.
And Corzine, with a fortune estimated at half a billion dollars at its peak, future ambitions were not confined to Wall Street. Even as he was seeking to revive his financial career, Corzine, a Democrat, had long styled himself as a financial executive moving seamlessly between Washington and Wall Street, in the mould of former treasury secretaries like Robert E Rubin or C Douglas Dillon.
With MF Global?s bankruptcy, that goal seems forever out of reach. It has also taken a big toll on a man known for the kind of optimism that comes naturally to experienced traders and political leaders.
Six weeks ago, Corzine journeyed a few blocks from the firm?s Midtown Manhattan office to the Hilton Hotel for a routine presentation to money managers. Corzine?s manner was anything but routine, however.
?He looked like he had just seen a ghost,? said one participant. ?He looked visibly disturbed.?
Corzine could not be reached for comment.
Corzine?s arrival seemed like a coup for MF Global when it hired him as chief executive. MF Global has been a leading player in brokering trades in commodities and derivatives like futures contracts.
European sovereign debt looked especially tempting. And while most Wall Street firms sharply ratcheted down their use of leverage, MF Global continued to pile on large amounts of debt. On the eve of its collapse, it had about $34 of debt for each $1 of capital it held, according to data from Keefe, Bruyette & Woods. By contrast, Goldman Sachs? leverage ratio is $13.50 for every $1.
Now, instead of a big job in Washington, Corzine faces difficult questions about what happened on his watch and whether he should have returned to Wall Street at all. ?He wanted to be back in the game,? said one old friend. ?He thought he could make it work.?