The Walking Debt

  • Aired:  11/08/11
  •  | Views: 151,469

Politician Jon Corzine saw Lehman Brothers as a cautionary tale; financial firm honcho Jon Corzine saw it as a dare. (8:08)

(CHEERS AND APPLAUSE).

>> Jon: HEY, EVERYBODY,

WELCOME TO "THE DAILY SHOW."

MY NAME IS JON STEWART.

WE'VE GOT A GREAT SHOW TONIGHT.

OUR GUEST IS GOING TO BE FORMER

PRESIDENT OF THE UNITED STATES

BILL CLINTON.

I'M GOING TO GET RIGHT TO IT

BECAUSE I HAVE A FEELING THE

INTERVIEW MIGHT GO LONG!

(LAUGHTER)

LET'S BEGIN TONIGHT WITH THE

ECONOMY.

THE OCCUPY WALL STREET PROTESTS

HAVE REMINDED AMERICANS OF TWO

THING: ONE, THE UNCHECKED

EXCESSES OF THE FINANCIAL

INDUSTRY AND, TWO, JUST HOW FEW

PUBLIC TOILET FACILITIES THERE

ARE IN LOWER MANHATTAN.

(LAUGHTER)

CAN A BROTHER GET A BATHROOM UP

IN THIS BITCH?

NO BATHROOM?

COME ON!

BUT ADDRESSING INCOME INEQUALITY

AND UNRAVELING THE COMPLEX AND

OFTEN TIMES CORRUPT RELATIONSHIP

BETWEEN GOVERNMENT AND

CORPORATIONS IS GOING TO BE MORE

DIFFICULT THAN SUSTAINED

RHYTHMIC DRUMMING WOULD SUGGEST.

(LAUGHTER)

WALL STREET EXECUTIVES BECOME

GOVERNMENT OFFICIALS TASKED WITH

REGULATING WALL STREET COMPANIES

THAT THEY WILL SOON BE HIRED TO

LOBBY FOR.

IT'S A CONFUSING... IF ONLY ONE

MAN COULD EMBODY THE CORPORATE

INDUSTRIAL GOVERNMENT COMPLEX IN

ALL ITS CLUSTER (BLEEP)ITUDE.

(LAUGHTER)

LADIES AND GENTLEMEN, I GIVE YOU

FORMER NEW JERSEY GOVERNOR, NEW

JERSEY SENATOR, AND GOLDMAN

SACHS C.E.O. JON CORZINE!

>> WE NEED TO HAVE REGULATORS

WHO ARE PRO-ACTIVE IN OVERSEEING

A SYSTEM.

SO THAT THEY CAN MAKE JUDGMENTS

BEFORE THE FACT INSTEAD OF AFTER

THE FACT.

WE NEED TO MAKE SURE THAT WE

HAVE SYSTEMATIC OVERSIGHT OF THE

DERIVATIVES MARKET.

THERE WOULD HAVE BEEN PUSHBACK

BUT THAT'S WHEN STRONG

REGULATION HAS TO BE IN PLACE.

(LAUGHTER)

>> Jon: I'M NOT SPARKLY

HANDING, I'M DRYING MY MANICURE.

THAT'S FORMER WALL STREET C.E.O.

TURNED POLITICIAN JONTOR SINE

CALLING FUR TOUGHER FINANCIAL

REGULATIONS TO PREVENT THE

CATASTROPHIC 2008 FINANCIAL FIRM

MELTDOWNS THAT DESTROYED OUR

ECONOMY.

BUT, OF COURSE, POLITICIAN JON

CORZINE LOST THE 2009

GUBERNATORIAL RACE IN NEW JERSEY

TO 2016 PRESIDENTIAL WINNER

CHRIS CHRISTIE.

(LAUGHTER)

LUCKY FOR CORZINE, HE STILL HAD

THAT WALL STREET C.E.O. THING TO

FALL BACK ON.

>> M.F. GLOBAL, A FINANCIAL FIRM

RUN BY FORMER NEW JERSEY

GOVERNOR JON CORZINE, HAS FILED

FOR BANKRUPTCY.

(LAUGHTER)

>> Jon: HELLO GRADUATE SCHOOL!

WELL, THE 2008 FINANCIAL

CRISIS... SETTLE DOWN.

THE 2008 FINANCIAL CRISIS THAT

SO HORRIFIED CORZINE WAS CAUSED

BY RISKY BETS ON BAD DEBT.

I CAN ONLY IMAGINE THAT WHAT

CAUSED CORZINE'S COMPANY TO

COLLAPSE IN 2011 WAS THE GREAT

INTEGRITY WITH WHICH HE

CONDUCTED HIS BUSINESS.

WHICH WAS ANATHEMA TO THE

CASINO-LIKE ATMOSPHERE ON WALL

STREET AND THE FAT CATS WHO

RESENTED CORZINE'S SURPLUS OF

WISDOM.

CUE WHAT HAPPENED.

>> THE COMPANY AT HIS BEHEST

MADE BIG BETS ON EUROPEAN BONDS,

EUROPEAN DEBT.

YOU CAN SEE WHAT'S HAPPENING IN

EUROPE.

>> $6.3 BILLION WAS INVESTED IN

THE DEBT OF ITALY, SPAIN,

PORTUGAL, AND IRELAND.

ALL COUNTRIES NOW CONSIDERED IN

SEVERE ECONOMIC TROUBLE.

(LAUGHTER)

YOU BET IT ALL ON RISKY EUROPEAN

DEBT, AND YOU LOST.

(LAUGHTER)

SURPRISE.

IT'S LIKE PLAYING ROULETTE AND

PUTTING ALL YOUR MONEY ON

PURPLE.

(LAUGHTER)

ALL RIGHT, LET'S CALM DOWN HERE.

LET'S CALM DOWN.

LET'S CALM DOWN.

SOMETIMES RISK RISKY BETS PAY

OFF.

YOU KNOW, PEOPLE TAKE CHANCES TO

MOVE CAPITAL.

THE ISSUE, CORZINE HAD WITH

FINANCIAL COMPANIES LIKE LEHMAN

AND BEAR STEARNS WASN'T SO MUCH

THE RISKY BETS, IT WAS HOW

LITTLE COLLATERAL, CASH ON HAND,

THAT THEY HAD TO SUPPORT THOSE

BETS.

SO EVEN A SMALL MISTAKE COULD

BRING DOWN AN ENTIRE FIRM.

I BELIEVE THE STREET TERM IS

"OVERLEVERAGED."

>> I THINK PEOPLE NEED TO

UNDERSTAND WHERE LEVERAGE IS.

>> EXTRA LEVERAGE BEYOND

REASONABLE BOUNDS IS WHAT HAS

GOTTEN US INTO THIS PROBLEM.

>> THE MORE TRANSPARENCY, THE

MORE CONTROLS ON LIQUIDITY, THE

MORE CONTROLS WITH REGARD TO

EXCESSIVE LEVERAGE THAT BUILD UP

IN THE SYSTEM IS THE KIND OF

REGULATORY SCHEME WE NEED.

I SUPPORT IT.

>> Jon: THAT IS JON CORZINE

GNCHTS.

(LAUGHTER)

IN APRIL OF LAST YEAR CLAMORING

FOR REGULATION TO PREVENT WALL

STREET FIRMS FROM DOING THIS.

>> M.F. GLOBAL WAS LEVERAGED AT

A RACE OF 40-1.

THAT MEANS FOR EVERY DOLLAR OF

EQUITY IT HAD, IT HELD NEARLY NEARLY

$40 OF DEBT.

>> TO PUT IN PERSPECTIVE, LEHMAN

BROTHERS HAD LEVERAGE OF ABOUT

30 OR 33-1.

>> Jon: MOTHER (BLEEP)ER!

(LAUGHTER)

(CHEERS AND APPLAUSE)

LET ME JUST GET THIS STRAIGHT.

(LAUGHTER)

POLITICIAN JON CORZINE SAW

LEHMAN BROTHERS AS A CAUTIONARY

TALE.

FINANCIAL FIRM HONCHO JON

CORZINE SAW IT AS A DARE.

(LAUGHTER)

30-1?

PUSSIES.

(LAUGHTER)

YOU KNOW, NO, IT'S NOT HIS FAULT

FAULT.

CORZINE JUST COULDN'T RESIST THE

SWEET NECTAR OF THE PRIVATE

SECTOR.

(LAUGHTER)

BUT I'M WONDERING, WHAT DID

POLITICIAN JOHN CORZINE SAY

ABOUT C.E.O.s WHO TRY AND

CIRCUMVENT REGULATION AGAIN?

>> THERE WOULD HAVE BEEN

PUSHBACK, BUT THAT'S WHEN STRONG

REGULATION HAS TO BE IN PLACE.

>> Jon: AND WHAT DID M.F.

GLOBAL HEAD JOHN CORZINE DO

VIS-A-VIS BEING REGULATED?

WELL, WHEN THE FINANCIAL

REGULATORY AGENT TOLD HIM HE

NEEDED MORE CAPITAL TO LOWER HIS

LEVERAGE HE WENT OVER THEIR HEAD

AND LOBBIED THE S.E.C. TO MAKE

THE REGULATORS GO AWAY.

WHICH APPARENTLY ON WALL STREET

IS AN OPTION.

LIKE WHEN A COP ASKS YOU OR KNOW

STEP OUT OF OUR VEHICLE AND WE

CALL THE POLICE COMMISSIONER AND

GO "HEY, GET THIS JACKASS OFF MY

BEHIND!

I GOT PLACES TO GO, THAT'S WHY I

WAS SPEEDING!"

(LAUGHTER)

NOW, IN CASE ALL OF THIS IS

MAKING YOU DEPRESSED, GIVING YOU

THE SENSE THAT WALL STREET IS A

VAST A VINO WHERE GAMBLERS RISK

YOUR LIFE SAVINGS WITHOUT

CONSEQUENCES, REST ASSURED,

CORZINE ISN'T WALKING AWAY

SCOT-FREE.

HE'S PAYING A HEAVY PRICE.

>> JON CORZINE HAS RESIGNED AS

C.E.O. OF M.F. GLOBAL.

>> HE'S GIVING UP WHAT WOULD

HAVE BEEN A $12 MILLION

SEVERANCE PACKAGE BUT IT'S

UNCLEAR IF HE WOULD HAVE BEEN

ABLE TO GET THAT SEVERANCE

ANYWAY.

>> Jon: THAT IS RIGHT!

NOT ONLY WILL JON CORZINE RUN

THE COMPANY HA DOES NOT EXIST

ANY LONGER HEX ALSO WILL NOT

RECEIVE ANY OF THE MONEY IT DOES

NOT HAVE.

(LAUGHTER)

WITHOUT THAT $12 MILLION, HE'S

GOING TO HAVE TO SCRAPE BY ON

THE $150 TO $400 MILLION HE HAS

ALREADY EARNED.

I GUESS FROM NOW ON HE'LL BE

RIDING HOME ON THE BUS-- JET,

THAT HE HAD

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