Because Corzine has friends in high places and figured he's safe and he's right.

The Corzine Rule

By Jeff Carter

Came across this article on May 29 that talks about the continuing saga of MF Global and Jon Corzine. It’s amazing that this epic financial scandal gets no consistent main stream media coverage. Over a billion was stolen. Corzine is in Madoff territory.

Here is the proposed rule,

Futures brokers would need to get approval from a top executive before making big withdrawals from customer accounts under a rule now pending and referred to in the industry as the “Corzine rule”, after MF Global’s former CEO Jon Corzine.

Why is this stupid? Because it wasn’t a lack of rules that allowed Corzine to steal from customer accounts. It was a lack of ethics on the part of one person. Corzine stole the money to margin bad trades he made through his MF account. He invested in European bonds, chasing yield and seeking to make big proprietary profits for MF Global. Their earnings were under huge pressure because the operations of the company weren’t particularly efficient, and the yields on US Treasury debt are so low that they weren’t able to earn a projected return on excess deposits.

The MF Global fraud is just another blip in the continuous waterfall of events that further erodes the general public’s confidence in the public markets. Nothing that government, regulators, the Fed, or exchanges have done since the crash of 2008 has done anything to shore up the spirits of the public.

Enron, Worldcom, Fannie and Freddie, Madoff, Flash Crash, Corzine and MF Global, the Facebook ($FB) IPO. It doesn’t end and I am sure I am forgetting a few. It’s no wonder the public considers a mason jar as an acceptable place to put money. The ultimate risk off trade!

If we go back to 2001 and Enron, the efforts by regulators look even worse. Sarbanes-Oxley has done nothing. Dodd-Frank is horrible legislation that should be repealed in its entirety. The SEC and CFTC are woefully behind the curve when it comes to regulating electronic markets; dark pools, payment for order flow, trading against customers, front running customers, are all encouraged. The government bailed out banks, Fannie and Freddie, that took too much risk. Instead of allowing the marketplace to work to penalize bad behavior, we have codified it and endorsed it through “too big to fail” and other methods. No doubt, the market has a ticking time bomb somewhere and certainly another cataclysmic financial event will happen again. You back it up with your tax dollars.

Jon Corzine stole from his customers. Until Corzine is put on trial in a court of law, no one will be able to get to the truth. He is being protected by the party in charge. The political waters are so virulent that they don’t want to see him tried. The event happened last October. Surely there is enough information available to convene a grand jury and begin indicting people. The public is being played. We are schmucks.

My supposition is that there is a very minute percentage of bankers on Wall Street that engage in the same behavior but haven’t been burned yet. They aren’t excited about seeing a Corzine trial either. Transparency has a way of showing who has clothes on, and who is naked. A simple rule isn’t going to change people that are bent on engaging in bad behavior. Better for the free market to penalize them, if we are willing to let it happen.

The mainstream media's disinterest in this case is telling. Corzine's actions have hurt the markets more then is readily apparent. It has increased the view that Wall Street is corrupt and a fools game. The damage to America as a result is enormous.