As Seth noted earlier, the collapse of former New Jersey Governor and Goldman Sachs co-chairman Jon Corzine’s latest financial venture is the end of his hopes for higher office. But it is more than that. The discovery that $700 million of the money investors put into his MF Global firm is missing is a shocking scandal that highlights liberal hypocrisy as much as it does the excesses of the world of Wall Street high finance.
Corzine is not just another high-flying investment ace that was shot down by bad bets — in this case by his firm’s decision to put customers’ money in European sovereign debt. Such figures are generally associated with the fat cats whom popular culture tells us are all Republicans who finance conservative causes. Corzine was, after all, not just a Democrat but one of the party’s bright hopes just a few years ago and a leading liberal advocate for bigger government as well as, in a touch dripping with irony, for reining in excessive compensation for Wall Street executives. More than just a stereotypical “limousine liberal,” Corzine was a major figure in mobilizing financial support for the Democratic Party, a role that he continued to play even after losing his try for re-election in 2009 to Chris Christie. The White House will try to distance itself from Corzine, but the disgrace of one of his leading bundlers will make it a little harder for Obama to spend the next year wandering the countryside complaining about Republican responsibility for Wall Street greed and income inequality.
Seasoned observers of both politics and finance already understood that scoundrels could be found in every political camp. But that’s not the song being sung by the president and his Democratic choir. Obama has sought to piggyback on the Occupy Wall Street protests and their inchoate demands for punishing the wealthy. The president has been inveighing against the avarice of financiers as well as the willingness of Republicans to oppose efforts to confiscate more of their income in the name of a loosely defined belief in lessening income inequality. But the fact that one of the leading pillars of his campaign appears to be guilty of all the sins generally associated by Democrats with the 2008 financial meltdown that helped elect Obama in the first place ought to cut the legs out from under the president’s populist pose.
The fact that Corzine’s financial skullduggery is linked with the impending default of Greece is also telling. Corzine’s reign of error in New Jersey was marked by fiscal profligacy that mirrors the breakdown in Athens and forced his successor to go to war with state unions in order to start the state back down the road to solvency. Like the Greek politicians who complain about the impact of austerity policies needed to pay for past spending sprees, Democrats now indulge in demagoguery aimed at portraying their opponents as the party of the rich while opposing genuine reform of government spending habits. That they do so while raking in contributions from Wall Street malefactors like Corzine just adds to their hypocrisy.
When Obama speaks about the political influence of a corrupt Wall Street establishment that victimized investors and ordinary Americans while reaping profits he will want us to associate those vices with his opponents. But Corzine proves that this self-serving sermon would be better served up to his own wealthy supporters than anyone else.