For Corzine, who lost a legendary runoff against Hank Paulson for the control of Goldman Sachs a decade or so ago and sustained an equally bruising defeat by Chris Christie in the 2009 New Jersey gubernatorial election, the bankruptcy may be his worst professional moment -- and one that's catapulted him atop the list of anti-heroes since the financial crisis began. It just isn't entirely deserved.
When Jon Corzine took the reins of MF Global in March 2010, the firm hadn't had a profitable year since 2007, it was about to report its largest annual loss as a public company and its shares were down 70% since its IPO three years prior. MF's financial leverage ratio at the time was 45.8, according to Bloomberg data, it had assets of over $50 billion and an exposure to foreign government debt of over $9 billion. That was all before Standard & Poor's downgraded Greece's sovereign debt ratings in April 2010, and the country and eurozone began spiraling into a sovereign debt crisis that has gotten progressively worse.
In Corzine's first year at the helm, he actually dialed back the leverage, risk and debt at MF Global.
By March 2011, the firm had cut its repo position of foreign government debt by almost half to $4.8 billion from $9.2 billion, its financial leverage had fallen by more than 25% to 33.6 and its debt was reduced by nearly 30% to $26.7 billion. Short-term investments (think the company's trading account) fell from $46.1 billion to $36.1 billion in Corzine's first year. In September 2009, MF Global had a leverage ratio of 52.1 and investments of $54.9 billion signaling how unstable the firm was prior to Corzine's arrival.Reports of Corzine's outsized risk apetite and a less stable business simply aren't the case if you look at MF Global's financial statements. Meanwhile, Corzine improved the company's liquidity -- doubling its long-term financing from when he took over the firm until its bankruptcy Monday, while he cut its reliance on short-term financing -- making the company's trading operations more liquid and sustainable overall. Through bond issues in the most recent quarter ended in September, Corzine took MF's long term debt from under $500 million to nearly $900 million, while he cut its short term debt by over $11 billion during his tenure. In his earnings call with analysts last week, Corzine said of the program, "We've substantially improved our capital and liquidity positions, while reducing our weighted average cost of capital and lengthened its tenure."
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