Friday Flotsam - Fraudsters, Hypocrites, Liars and Politicians. But I repeat myself.

Time once again for the Dividist to stroll down our metaphorical beach and take note of the detritus that has washed ashore and cluttered this little island of rationality in the great big blogospheric ocean.

Much of what attracted our attention this week were items that have washed ashore here before. Again and again and again. The Dividist simply does not have the arm strength to throw this garbage far enough into the sea to keep it from washing back on our beach. Pity.

ITEM - "Will No One Rid Me Of This Meddlesome Priest Just Fix It?"
The Dividist has been covering "The Case Of The Missing Billion." since it was revealed that heretofore sacrosanct legally segregated client funds were apparently tapped to backstop Jon Corzine's ill-advised "bet the company" wagers at MF Global. Little noticed in his testimony to the Agricultural Committee on Wednesday was this tidbit that foreshadows some coming legal attractions, to whit - The Becket Defense. From Huffington Post:

"Lawmakers asked Corzine to lay out how he may have "unintentionally" contributed to the mixing of customer and firm money. He pointed to the chaos of the hours leading up to MF Global's bankruptcy filing on October 31. "Someone could misinterpret 'You gotta fix it,' which I said the evening of October 30th,'" Corzine said."

Yes, "You gotta fix it" could easily be misinterpreted to mean something like "Raid the client accounts if you have to, but get me the time to sell this piece of crap before the street figures out we're insolvent." That kind of misunderstanding happens all the time. Consider this innocent off-the-cuff remark by King Henry II, acted on by nearby knights in his employ, and the next thing he knew, through no fault of his own, he learns the Archbishop of Canterbury was lying in a pool of blood. These things happens.

Corzine Agonistes

Credit where it is due. Jon Corzine has reappeared and is testifying before the House Agricultural Committee. He is not taking the 5th, as I'm sure his lawyers would prefer. It's being covered live on CNBC, and attracting blogospheric attention:

Corzine: ‘I Simply Do Not Know Where The Money Is’ — A contrite Jon S. Corzine will express both sorrow and a firm defense of his actions Thursday in his first public appearance since the collapse of MF Global Holdings Ltd. in late October. — “Recognizing the enormous impact...

Discussion: Hot Air, Law Blog, The Heritage Foundation and americanthinker.com

RELATED:

David S. Hilzenrath / Washington Post:
Jon Corzine to tell House panel he was ‘devastated’ by MF Global bankruptcy

Discussion: National Review, Outside the Beltway, Belmont Club, New York Post, The Lonely Conservative and The PJ Tatler

Joe Weisenthal / Business Insider:
JON CORZINE WILL TESTIFY: ‘I Simply Do Not Know Where The Money Is’

Discussion: Firedoglake, Rolling Stone and Jammie Wearing Fools

While he is indeed testifying and answering questions, it does not mean that he is being forthcoming. His prepared testimony was previewed by the WSJ:

"Much of the day's testimony is likely to focus on a significant shortfall in customer funds at MF Global. As Mr. Corzine scrambled to stabilize the firm in its last days, it was discovered that hundreds of millions of dollars were missing in customer accounts.

The trustee overseeing MF Global's liquidation estimates the amount at $1.2 billion. Mr. Corzine will say in his testimony that he had little to do with the mechanics of moving customer cash and collateral and that he was "stunned" when he learned on Oct. 30 that the money was missing.

"I simply do not know where the money is..."

This last is almost certainly true. The money was lost in highly leveraged, high risk trades that Corzine authorized as CEO, and he truthfully doesn't know who has the money now. But - he is disingenuously answering an irrelevant question.

The real question is not where the money is now, the real question is: How was segregated client accounts illegally mixed with MF Global trading accounts, and who authorized client accounts to be tapped for this purpose? The answer to that question points to a culprit in criminal negligence or fraud.

In the early going, Corzine was asked the relevant question whether he authorized the transfer of segregated client funds. CNBC:

"Questioned directly about the transactions leading to over $1 billion in missing client funds, Corzine could not offer clarification."I never intended to break any rules. I'm not in a position given the number of transactions to know about the movement of any specific funds. I certainly would never intend to have segregated funds moved," said Corzine."

Well. There you go. It wasn't his intent. Isn't that special? Maybe he authorized it. Maybe he didn't. But it wasn't his intent. How convenient. I wonder - who did intend for a billion or so of client funds to be moved? Could it be... SATAN???

Divided and Balanced.™
Now that is fair.

CFTC Chairman Gary Gensler to Senate Committee: "Jon who? MF Global What?? Are you talking to me?"

UPDATED: 03-DEC-11

In "The Case of the Missing Client Money" at bankrupt MF Global, the relationship between regulator and the regulated is again coming to the fore. Obama administration appointee Gary Gensler – Chairman of the Commodity Futures Trading Commission - recused himself from participating in the investigation of MF Global because of his close ties to CEO Jon Corzine. Fine and good. But he did not recuse himself from meeting with Corzine about potential CFTC rule changes on segregated client accounts earlier this year. You know - the same rules that would have governed use of the very funds that are now missing from the bankrupt MF firm.