Jon Corzine's Relationship With CFTC Chair Gary Gensler Probed

corzine gensler
Jon Corzine and Gary Gensler
Chris Ratcliffe/Bloomberg via Getty Images; Joshua Roberts/Bloomberg via Getty Images

On the road this week, so apologies for the brief post. (Have a longer thing coming out later this week.) Getting a lot of calls about Jon Corzine and his relationship with Commodity Futures Trading Commission (CFTC) chairman Gary Gensler.

Both Corzine and Gensler worked at Goldman back in the day, and the word is that Corzine personally lobbied Gensler to delay the implementation of new rules that would have helped prevent Corzine from raiding his own clients' funds.

This whole issue smacks of the improper communications between other former Wall Street co-workers like Hank Paulson and Lloyd Blankfein. More and more, it appears that, as a matter of routine, federal regulators like Paulson (in 2008) and, later, Gensler reach out to old friends on Wall Street to negotiate/discuss the timing and the form of various policy changes, bailouts, and other regulatory matters. Inside information seemingly is traded with remarkable casualness.

This is one of those issues where there's no point in calling for more regulations. No matter what laws we have, we can't have regulatory heads breezily chatting about their enforcement plans with former co-workers who have huge financial interests resting upon their decisions. The Paulson case, in which information about the rescue of Fannie and Freddie was casually disclosed to a group of hedge fund chiefs before the public knew about it, was a far worse thing than what Gensler is accused of. Gensler, despite his Goldman pedigree, has generally gotten good reviews from Wall Street reform types, and has demonstrated a willingness to help tighten up abuses in the derivatives and commodities markets (including walking back deregulatory actions in the derivatives world that he himself had a role in creating back in the Clinton days). But this business with Corzine will likely be a black eye for him, and rightly so.

But the overall problem, of regulators keeping up their chummy, chatty relationships with Wall Street guys as they make market-altering regulatory decisions, appears to be epidemic. Again, this is an issue where new regulations won't help – we just need different people in charge, people with at least some grasp of the whole propriety thing, who understand that financial friendships have to take a pause when you go to work behind the police tape.

Anyway, more on that coming soon. In the meantime, check out this clip, which made me proud to be Irish:

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Matt Taibbi

Matt Taibbi is a contributing editor for Rolling Stone. He’s the author of five books and a winner of the National Magazine Award for commentary. Please direct all media requests to taibbimedia@yahoo.com.

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