At Goldman Sachs (NYSE: GS ) , some people referred to Jon Corzine as "Fuzzy." And it wasn't just the avuncular beard, either. In William Cohan's Money and Power, he quotes a partner as saying that Corzine was a "fuzzy thinker" who "wasn't crisp and wasn't black and white. He fuzzed things when he communicated."
That fuzziness was on full display yesterday, when Corzine testified before the House Agriculture Committee. His testimony was peppered with phrases like, "I don't remember" and "I don't recollect." He frequently said that he couldn't answer questions without access to notes, documents, and emails. At times during the hearing, it seemed hard to believe that this man had been CEO of both Goldman Sachs and later MF Global in addition to being a senator and governor of New Jersey. At one point, he actually said that he didn't know who the person was "who would hit the button" to make money go places. Shouldn't a CEO know the person with the button?
How fuzzy was he?
The House Agriculture Committee subpoenaed Corzine so they could learn more about his role in the collapse of MF Global. If you were hoping to see some sparks fly, however, you'd have been out of luck. I was amazed by the warmth and chumminess of the proceedings. At one point, a congressman congratulated Corzine on his wealth! At another time, a congressman -- perhaps forgetting about the subpoena -- thanked Corzine profusely for remaining there so long for all the questions. Through it all, Corzine had a name card in front of him that read: The Honorable Jon Corzine.
Corzine began his testimony by reading his prepared remarks (pdf file). He said he "was stunned" to learn that his firm could not account for hundreds of millions of client money. And he added that he "simply [does] not know where the money is."
Corzine was very quick to point out that his involvement "in the firm's clearing, settlement and payment mechanisms, and accounting was limited." At one point, he said that he did not know "which accounts are unreconciled or whether the unreconciled accounts were or were not subject to the segregation rules." This attempt to distance himself from the operational aspects of his firm led former SEC Chairman Harvey Pitt -- as reported on Francine McKenna's blog -- to describe his prepared remarks as the "three monkey defense: See no evil, hear no evil, speak no evil."
Too complicated to run
This "defense" continued throughout the remainder of the hearing. Corzine made it clear that he wasn't well-versed on the operational side of the business, and he appeared to be hazy about who did what in this area. On numerous occasions during his testimony, he referred to how complex everything was, especially during the final days leading up to the bankruptcy. When asked if he knew about commingling of funds, he replied, "I never intended to break any rules. I never intended to direct or have segregated funds moved." Those words "never intended" came up a lot yesterday.
Corzine appeared to open up the possibility that maybe unintentional mistakes were made in the chaos of the final week before the bankruptcy. And how could he be expected to know what was going on?, he seemed to imply. Things were just incredibly complex. At one point I tweeted that Corzine was employing the "Too Complicated to Run" defense. The complexity of MF Global's business seemed to be beyond the ability of anyone to effectively manage. At least that's what Corzine's testimony appears to suggest.
We deserve better
Sadly, our elected representatives, for the most part, didn't really challenge this defense. Congressman David Scott, to his credit, didn't buy the "it's all too complex" argument, but the others didn't offer strong objections.
As a result, the hearing was very disappointing and didn't shed much light on what happened to the customers' money. Going in, I wondered if Corzine would be pleading the Fifth Amendment at times in order to protect himself. Alas, pleading ignorance seemed to work just fine for him.
I honestly do not believe for a minute that Corzine's story would hold up under more vigorous and intelligent questioning. I hope that day comes sometime soon. MF Global's customers, who have been so poorly served throughout this debacle, were once again let down yesterday -- this time by the U.S. Congress.
Right now, they deserve clarity, not fuzziness.
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