Thursday, August 16, 2012

True Gentlemen: Eric Holder and the Justice Department

Many people have grievances against our Attorney General, and he's certainly made some enemies along the way. But he must be commended for the decision of his Justice Department not to prosecute officers of MF Global over the shift of a billion dollars of account holders' money onto the firm's own ledgers, whence it vanished into the ether.

But a $6.3 billion wager on the European sovereign debt proved fatal. The size of the bet was enough to wipe out the firm many times over, and as questions about Europe’s health grew, a run on MF Global ensued. In the panic, the firm tapped customer money to stay afloat, which scuttled a last-minute deal to save the firm. Mr. Corzine resigned just days after the firm filed for bankruptcy (Azam Ahmed and Ben Protess, NYT "Dealbook"--the source of all quotes unless otherwise noted)

Many uncouth ruffians have suggested that such actions constitute theft and fraud, and questioned the lack of vigor in punishing the apparent offenders. 
I mean, if 10 bucks disappears from the till in my local, the people investigating the theft are generally curious as to whether or not it ends up in the bartender's wallet. And, given enough time and dedication, they will find that out (Pierce).
One Matt Taibbi has even gone so far as to suggest in the most vile and obscene terms possible that decisions not to prosecute our noble bankers constitutes a failure of manliness on Holder's part. 

Nothing could be further from the truth. Holder's associates, assuredly following the gentlemanly example of their superior (as good citizens ought!), have decided that the money was lost by mistake. 
After 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.
The honorable gents at MF global assure us that this transfer of funds was an honest mistake, and the honor system compels us to accept their explanation without question. Indeed, if we start demanding explanations or imputing motives to the principals in these unfortunate incidents, where might we (and these fine gentlemen) end up

One thing prevents me from offering a full and unqualified endorsement of Holder. It is, of couse, quite impolite to point out errors made by others, particularly when doing so makes an esteemed gentleman like John Corzine appear a bumbling imbecile whose incompetence is exceeded only by his delusions of expertise.
As the firm’s leader, Mr. Corzine was upbeat about its future, writing an e-mail to employees in January 2011: “Let’s be an example of how to do it right and play a leadership role in restoring confidence in our industry.”
One hopes that Mr. Corzine succeeds in his 
bid to rebuild his image and engage his passion for trading... weighing whether to start a hedge fund, according to people with knowledge of his plans.
It will certainly be an uphill battle for him, a without loose billions of his customers' money, as in his present state of affairs
[h]e is currently trading with his family’s wealth.
Certainly, the blow to Corzine's reputation is severe and would otherwise merit my scorn, but as an offense against manners it certainly pales in comparison to the direct attacks against our beloved honor system, the very basis of our civilization. Three cheers for Eric Holder, never mind what Charlie Pierce says.

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