We had the story about a month ago regarding the future of TSec Tim Geithner. The suggestion was that post a debt ceiling deal good old Tim would be out of a job. That might be in the works.
I’m not sure who to blame for the fiasco in DC the past few weeks. I think a lot of folks have their hands dirty in this mess. But certainly Geithner deserves his share of the blame. Tim is also a vestige from another era. He is as responsible as anyone for TARP. The case for sending him packing is pretty strong.
The question is when, and who will replace him. I found something in a bond offering that gives a clue. I’ve not seen this kind of language before. I think it tells us where this is headed.
MF Global is coming to market with $300mm of senior notes. By itself, this is a routine deal. But this one has some kickers to it that have me scratching my head. Jon Corzine is the CEO over at MF. Jon is ex Goldman and ex governor of NJ. A very powerful guy. He is also a solid Democrat and big supporter of Obama.
There is a unique feature in the MF Global deal. The interest rate on the bonds rise a full one percent if one conditions is met in the future. What is that condition?
The issue carries a notable “key man event” trigger, mandating a 100 bps increase in the interest rate if the company’s chief executive officer, Jon Corzine, is appointed by the President of the United States and confirmed for a role in the federal government before July 1, 2013.
Lawyers pore over bond deals. This one is no exception. As part of the due diligence someone must have asked Corzine how long he would be the CEO at MF. His answer must have been, “I’m staying until the President calls me with an offer”. The language in the bond deal has to mean that Corzine is already talking with the White House.
Corzine is a big shot (he had equal responsibilities at Goldie as did Hank Paulson). He would not consider a low level job in DC. So it has to be Tsec that he is after.
Let the dust settle for a month or so on both the debt deal and the MS bond offering and we are going to see a new guy at Treasury. Another Goldmanite. Just what we need….
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There is also an article in today's Times on a possible Geithner departure.
ReplyDeleteReplacing Geithner with Corzine before 2012 will be tricky for Obama. He might nominate Corzine while Geithner is serving in a lame duck status and, if necessary, resort to a recess appointment over the holidays. That would assure continuity at Treasury during Obama's term. However, Corzine has a pretty good job that he may not be willing to leave at this time.
I think the mayor of New York, Bloomberg, will be the next Treasury Secretary.
ReplyDeleteBloomberg radio is now Obama(speeches, news,etc. all the time. Last week all the hosts of the radio shows were all parroting Obama's claim that the markets will drop if debt ceiling is not raised.
I used to enjoy listening to Bloomberg radio. Not any more. Too much Obama propaganda.
Bruce,
ReplyDeleteHelp me out here. How does this not violate U.S.C 18 § 211 (or any other laws regarding promises of positions that result in financial gain)?
"Acceptance or solicitation to obtain appointive public office
"Whoever solicits or receives, either as a political contribution, or for personal emolument, any money or thing of value, in consideration of the promise of support or use of influence in obtaining for any person any appointive office or place under the United States, shall be fined under this title or imprisoned not more than one year, or both.
"Whoever solicits or receives any thing of value in consideration of aiding a person to obtain employment under the United States either by referring his name to an executive department or agency of the United States or by requiring the payment of a fee because such person has secured such employment shall be fined under this title, or imprisoned not more than one year, or both. This section shall not apply to such services rendered by an employment agency pursuant to the written request of an executive department or agency of the United States."
Guess I should've referenced § 210.
ReplyDelete"Offer to procure appointive public office"
In the words of Dwight D. Eisenhower:
ReplyDelete"If we permit extremes of wealth for a few and enduring poverty for many, we shall create a social explosiveness and a demand for revolutionary change."