Obama's Team Relied on Jon Corzine for Economic Advice

In 2009, the president's transition sought input from the now-former governor, who resigned his post at MF Global this month. Will it be an issue in 2012?


Jon Corzine has been the CEO of Goldman Sachs, a United States senator, and the governor of New Jersey, the position he held in 2009, when the Obama administration was preparing to take office. His mix of Wall-Street and public-sector executive experience is doubtless why the Obama transition team called on him for advice. As Joe Biden tells it, they'd gathered a few dozen economists in Chicago to talk over the financial crisis. Some were suggesting a bank holiday.

"I literally picked up the phone and called Jon Corzine and said Jon, what do you think we should do," Biden said. "The reason we called Jon is that we knew that he knew about the economy, about world markets, how we had to respond, unlike almost anyone we knew. It was because he had been in the pit -- because he had been in the furnace. And we trusted his judgment."

Now the October 2009 remarks could come back to haunt the Obama administration, given recent revelations about what happened after Corzine left office to run the brokerage firm MF Global, a position he resigned last week. "The resignation capped a disastrous week for Mr. Corzine, as he saw MF Global lose two-thirds of its market value, file for bankruptcy and face a handful of federal investigations into more than $600 million in missing customer money," DealBook reported.

The details:

Soon after joining the firm, he moved to transform the sleepy brokerage firm into a full-service investment bank in the mold of his former employer, Goldman. He aggressively bought up European sovereign debt, wagering that the Continent would not let troubled countries default on their loans. As the sovereign debt crisis dragged on this fall, regulators noticed the risky bets and pushed the firm to hold more capital against the investments.

The move alarmed shareholders, clients and rating agencies, inciting a crisis of confidence. With the stock in free-fall, the firm searched desperately for a suitor to buy at least a part of its business.. overnight revelation of hundreds of millions of dollars of missing customer money scuttled any potential deal. Early Monday, the firm filed for bankruptcy.

This is the sort of story that shows why it will be difficult for the Obama administration to win over Occupy Wall Street protesters.

Presented by

Conor Friedersdorf is a staff writer at The Atlantic, where he focuses on politics and national affairs. He lives in Venice, California, and is the founding editor of The Best of Journalism, a newsletter devoted to exceptional nonfiction.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Politics

Just In