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Records Reveal Contact Between Corzine and the Fed in MF Global's Final Days


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Fox News:

was a humiliating moment, but Jon Corzine was determined to put the best face on it.

On Oct. 25 of last year -- six days before the stunning collapse of MF Global Holdings Ltd., the New York-based brokerage and commodities firm he headed -- Corzine released the company's dismal results for the second fiscal quarter of 2012. Revenue, he was forced to report, had declined from the same period the year before, from over $240 million to about $205 million; and selected losses for shareholders were estimated at $191.6 million, an increase of almost $100 million from the prior year.

One day earlier, the credit ratings agency Moody's, citing MF Global's heavy concentration on European sovereign debt, had cut MF Global's debt rating -- to one grade above junk bond status. Still, Corzine projected optimism, issuing a press release to go along with the earnings report that envisioned only a bright future for MF Global.

"Over the course of the past year, we have seen opportunities in short-dated European sovereign credit markets," Corzine said in the Oct. 25 statement, "and built a fully financed, laddered maturity portfolio that we actively manage. We remain confident that we have the resources and expertise to continue to successfully manage these exposures to what we believe will be a positive conclusion in December 2012."

Yet MF Global documents and telephone and email records obtained by Fox News show that on the morning of Oct. 26 -- not even a full day after the optimistic statement he released -- Corzine was contacting top officials at the Federal Reserve Bank of New York, including New York Fed President William C. Dudley. The records, supplied to congressional investigators by the New York Fed, show that over the next five days -- at which point MF Global filed for bankruptcy protection -- Corzine and Dudley spoke at least 10 times, and exchanged emails twice. There were still other contacts between Corzine, MF Global CFO Henri Steenkamp, and other New York Fed officials in the same time frame.

Jack Gutt, a spokesman for Dudley, said the New York Fed had no comment. But sources with knowledge of the substance of these conversations told Fox News that Corzine already knew MF Global's collapse was imminent, and had reached out to Dudley for two reasons: first, to see if the Fed could help find a buyer for MF Global; and second, to assist the Fed in its efforts to minimize the fallout from what both men now realized was shaping up as a Wall Street catastrophe, the eighth largest bankruptcy in American history.

Today, investigators for the House Financial Services Committee are poring over MF Global documents, records from the Commodity Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC), as well as the phone, email and fax records supplied by the New York Fed, to determine whether Corzine, in his optimistic statement of Oct. 25, was intentionally misleading investors and regulators. snip
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