The Last Days of MF Global
Because MF Global wouldn't technically own the bonds during their term—they'd be given to the lender as collateral until they matured, when MF Global would repurchase them—it wouldn't have to publicly report swings in the bonds' value.
But here's what was really appealing about this arrangement: Under accounting rules, MF Global could book the anticipated profits from the entire transaction up front, boosting its quarterly earnings. If the trades were big enough, they could make MF Global profitable. And they wouldn't even appear on the firm's balance sheet as debt.
A detailed article about the events that led to the downfall of MF Global. [more inside]
- once mostly a Futures Broker
and more recently a budding full-service Investment Bank run by ex-Governor/ex-Senator Jon Corzine
following ratings downgrades on the back of large losses on Eurozone Sovereign Debt
. Trades that Corzine himself oversaw
. It will be the 8th largest Bankruptcy in US History.
Much of the blame is being placed on Corzine's efforts to recreate his old firm
, Goldman Sachs. He was forced out
as Goldman CEO post IPO by none other than Hank Paulson
- the Secretary of Treasury who oversaw the creation of TARP
. [more inside]