Yesterday, I spoke with a retired partner at Goldman Sachs about MF Global.
He said the meltdown reminded him of 1994.
Back then Goldman was a partnership, owned by its senior investment bankers and traders. After two great years of profits, its traders made a wrong-way bet on interest rates and were losing hundreds of millions of dollars a month.
In February 1994, the Federal Reserve raised interest rates and a whole bunch of Goldman's trading positions "just blew up," the partner explained.
The investment bankers put pressure on the traders to reduce the amount of risk they were taking — and the traders pushed back.
"They were destroying our bank accounts — my own capital account lost half its value — but wouldn't change a thing. They were sure they were the smartest traders on the Street. Not on the Street. On the globe," the former partner told me.
The leader of these traders: Jon Corzine, now the chief executive of MF Global.
"This was exactly what it was like in 1994," the former partner said.
MF Global is thought to have taken heavy losses due to positions in European sovereign debt.
Questions? Comments? Email us at
Follow John on Twitter @ twitter.com/Carney
Follow NetNet on Twitter @ twitter.com/CNBCnetnet
Facebook us @