Corzineâs â2nd Goldmanâ hit by hard realities
By MARK DECAMBRE
Last Updated: 5:17 AM, October 26, 2011
Posted: 11:01 PM, October 25, 2011
Wall Street veteran Jon Corzine is fast learning that the road to becoming the next Goldman Sachs is paved with losses, downgrades and more than a little disappointment.
The 64-year-old former Goldman co-chairman, who has led MF Global for 19 months, yesterday reported the smaller broker-dealer rang up an astounding loss of $186.6 million in the third quarter -- its largest loss ever.
The red ink sparked investor fear of another Lehman Brothers-like collapse and crushed the stock, which fell 48 percent on the day to $1.86. Over the past 12 months, shares of New York-based MF have tumbled 76 percent.
Thatâs more than double Goldmanâs 36-percent decline -- which is significant, since Corzine, the former New Jersey governor and US senator, vowed to reshape the sleepy MF into a Goldman-like powerhouse.
Along with the eye-popping loss, MF reported that it harbored $6.4 billion in short-term positions in troubled European debt.
To put that in perspective: Goldman reported $2.5 billion of net exposures in sovereign debt, and rival Morgan Stanley reported that it held $2.1 billion in net exposure to European debt.
The marketâs brutal assault on MF came even as the institution attempted to provide greater transparency to investors by moving the planned date of its results release up to yesterday from tomorrow.
âWithout question, this quarterâs market environment was as difficult as any of those that Iâve experienced in my 30-plus years in finance,â said Corzine in a statement.
The results sent Corzine into a mad dash of phone calls and one-on-one meetings with investors and analysts to calm the marketâs worst fears.
MFâs crisis moment comes after Corzine unveiled a plan a year ago to shake up the firm from a sleepy broker-dealer into a mini-investment bank set on cashing in on the void in trading created by Goldman, Morgan Stanley and others moving out. So far, that game plan hasnât paid off.
Making matters worse, Moodyâs Investors Service on Monday downgraded the firm one notch to Baa3 -- just one peg above a dreaded junk-bond status.
Considered one of Wall Streetâs luminaries, Corzine boasts a storied career, highlighted by running Goldman in 1994 until he was forced out five years later, just before the gold-plated firm went public.
The Goldman IPO reportedly minted the banker-turned-politician a more-than-$400-million payday -- enough to recast him as a heavy hitter in political circles.
That was until he lost a bid for re-election to the statehouse in 2009 to Chris Christie.
Sandler OâNeill brokerage analyst Rich Repetto says he continues to maintain a âbuyâ rating on MF stock. The analyst told The Post that heâs cautiously optimistic about the bankâs ability to navigate this current rocky period.
âCan I guarantee they wonât go under? No,â he said. âBut of the risk that we know about, I think the firm can manage them.â
For Corzine, MF Globalâs abysmal performance places his firm in Goldmanâs league after the gold-plated company rang up $393 million in losses last quarter.
how can anyone trust a ceo who was the governor of a state and was sleeping with the head of a union while negotiating a contract with them?
