Jon Corzine Called to Congress to Explain MF Global’s Collapse

U.S. lawmakers plan to look into the relationship between Jon Corzine, the former head of collapsed brokerage MF Global Holdings Ltd (MF), and the major credit-rating agencies that downgraded the futures brokerage firm as it hurtled toward bankruptcy, The WSJ reported on Thursday, citing a person familiar with the matter.

MF Global received credit downgrades to junk status from both Moody’s (MCO) and Fitch in the days before its October 31 Chapter 11 bankruptcy protection, and Standard & Poor’s did so only after the bankruptcy.

According to the Journal, a U.S. congressional panel plans a December 15 hearing with regulators and top MF Global officials to review the firm’s spectacular collapse — the 8th largest bankruptcy filing in the U.S. — and also explore whether or not Corzine’s status — a former governor of New Jersey and a former chief executive of Goldman Sachs (GS), may have clouded the rating firms’ judgment.

The House Financial Services Subcommittee for Oversight and Investigations has invited Corzine, who has been publicly silent since resigning as MF Global’s CEO on Nov. 4, and Bradley Abelow, the firm’s chief operating officer, to look into the decisions and events leading to the collapse of the New York-based firm.

The Journal, citing its source, said the committee’s members plan to also look into the interactions between Corzine and rating agencies.

Lawmakers haven’t yet asked any rating firm to attend the hearing, the Journal’s source said.

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About Ron Haruni 1067 Articles
Ron Haruni is the Co-Founder & Editor in Chief of Wall Street Pit.

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