Federal regulators are poised to sue former New Jersey Gov. Jon Corzine (D) “over the collapse of MF Global and the brokerage firm’s misuse of customer money during its final days, a blowup that rattled Wall Street and cast a spotlight on Mr. Corzine, the former New Jersey governor who ran the firm until its bankruptcy in 2011,” the New York Times reports.
Wonk Wire: Bye Bye Bernanke
Al Hunt: “Ben Bernanke’s term expires in January and he has told associates that the eight challenging years he will have served would be enough. Some people close to the president say his top personal choice to succeed Bernanke would be former Treasury Secretary Tim Geithner. They established a close bond over four years.”
“Geithner, however, publicly and privately insists that he doesn’t want the job, and needs, for personal and financial reasons, more time in New York after years of government service. Even if he’s the president’s preferred pick, it’s uncertain that he would be pressured to take the job; that isn’t usually Obama’s style.”
The Week: “A bill called the Swaps Regulatory Improvement Act recently sailed through the House Financial Services Committee. But when the New York Times went through emails from a lobbyist to the congressmen who wrote it, the paper discovered an unofficial co-author: Citigroup.”
“It turns out that recommendations from Citigroup made up 70 of the bill’s 85 lines, with two important paragraphs copied almost verbatim — save for two words that were changed to make them plural.”
Fannie Mae “will make a $59.4 billion dividend payment to the U.S. Treasury, the company said Thursday after reporting a record first-quarter profit,” the Wall Street Journal reports.
“Fannie’s expected payment will bring to $95 billion the amount of dividends it has paid to the Treasury, compared to $116.1 billion in aid it absorbed between 2008 and 2011. If the profits of recent periods are sustained, Fannie could within the next year return more money to the Treasury than it has borrowed–though its payments aren’t going toward the actual repayment of its rescue funding.”
Matt Taibbi: “Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world’s largest banks may be fixing the prices of, well, just about everything.”
“You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates… That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world’s largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world’s largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.”
National Journal: “As head of the Securities and Exchange Commission for the past four years, Mary Schapiro failed to win a major civil action against any Wall Street executive connected to what may be the worst financial fraud in history, the subprime-mortgage scam that led to the 2008 crash. As head of the Justice Department’s criminal division for the past four years, Lanny Breuer failed to accomplish the same with criminal action. And now both are headed back over to the other side: deep-pocketed firms that earn their keep largely from Wall Street.”
A spokeswoman for the Bureau of Printing and Engraving tells the Washington Post that new Treasury Secretary Jack Lew’s very odd signature will appear on the nation’s currency in about 18 weeks.
Apparently, Lew “still has to submit his official signature to be used in the currency-production process, we’re told.”
David Stockman: “Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.”
An inspector general’s report found the U.S. Treasury Department approved “excessive” salaries and raises at firms that received taxpayer-funded bailouts during the financial crisis the Washington Post reports.
The report said Treasury “approved all 18 requests it received last year to raise pay for executives at American International Group Inc., General Motors Corp. and Ally Financial Inc. Of those requests, 14 were for $100,000 or more; the largest raise was $1 million.”
The Wall Street Journal blasts President Obama’s pick of Jack Lew to be the next Treasury secretary, noting his “only business credential is a stint at the most troubled too-big-to-fail bank.”
“The greatest irony is that given Mr. Lew’s crisis-era resumé, he bears a remarkable resemblance to the bankers who President Obama says created the financial crisis and deserve federal investigation. But apparently there’s an exception as long as your liberal intentions are noble and you’re a loyal Democrat. Then you can get rich at one of Wall Street’s biggest failures and end up running the entire financial system.”
As Treasury Secretary Timothy Geithner leaves office, the Chicago Tribune notes “he was clear about one thing he won’t be doing in the future — running the Federal Reserve.”
Said Geithner: “Not a chance. I have great respect for the institution, but that will be someone else’s privilege.”
Financial Times: Geithner leaves with reputation enhanced.
Matt Taibbi isn’t pleased with President Obama’s pick of former U.S. Attorney Mary Jo White to head the SEC.
“I thought to myself: Couldn’t they have found someone who wasn’t a key figure in one of the most notorious scandals to hit the SEC in the past two decades? And couldn’t they have found someone who isn’t a perfect symbol of the revolving-door culture under which regulators go soft on suspected Wall Street criminals, knowing they have million-dollar jobs waiting for them at hotshot defense firms as long as they play nice with the banks while still in office?”
President Obama will nominate Mary Jo White to lead the Securities and Exchange Commission, “tapping an attorney with broad experience in prosecuting white-collar crimes to lead an agency that has a central role in implementing Wall Street reform,” the AP reports.
Obama will also “renominate Richard Cordray to serve as head of the Consumer Financial Protection Bureau… The president used a recess appointment last year to circumvent Congress and install Cordray as head of the bureau. That appointment expires at the end of this year.”
“He has been on Wall Street’s side since day one.”
— Former New York Gov. Eliot Spitzer (D), in a Reuters interview, on President Obama’s “minimal steps” to regulate banks.
A memo says former New Jersey Gov. Jon Corzine (D), who was head of brokerage MF Global as it failed and lost $1.6 billion in client money, gave “direct instructions” to transfer $200 million in customer funds to meet an overdraft in one of the firm’s bank accounts, Bloomberg reports.
“The money transferred came from a segregated customer account… Corzine testified that he never intended a misuse of customer funds at MF Global, and that he doesn’t know where client funds went.”
The White House plans to nominate Dartmouth College President Jim Yong Kim to head the World Bank.
Associated Press: “Obama took a strong personal interest in filling the World Bank vacancy after current president Robert Zoellick announced in February he was stepping down. Obama and his advisers considered more than a dozen candidates, including well-known figures in the administration. But in the end, officials said, Obama pushed for a nominee with broad development experience and was particularly drawn to Kim’s innovative work fighting the spread of AIDS and tuberculosis.”