Corzine to Replace Geithner at Treasury?

Jon Corzine
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Jon Corzine

There's long been speculation that Jon Corzine might be tapped to replace Tim Geithner as Treasury Secretary.

Geithner will have to step down at some point. Months of the debt ceiling debate, no doubt, have taken their toll. And Geithner's family is said to be heading back up to Larchmont (Geithner was never able to sell his house there).

Obama, after having spent the last couple of years fighting with Wall Street, might want to pick someone viewed as more sympathetic to the financial sector. Corzine, who was co-president of Goldman Sachs, could be exactly what the political climate ordered up.

The Corzine buzz just grew a little louder: Bruce Krasting has noticed that a debt issuance by Corzine's current employers, MF Global, has an intriguing clause.

There is a unique feature in the MF Global deal. The interest rate on the bonds rise a full one percent if one condition is met in the future. What is that condition?

The issue carries a notable “key man event” trigger, mandating a 100-basis-point 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.

Or it could just indicate that the potential investors in MF Global's bonds are concerned that they'll lose Corzine to Treasury.

Interestingly, this means that MF Global is shorting Corzine's chances of going to Treasury.

Update: MF Global has said that the "key man" provision was included in the debt prospectus at the request of the underwriters.

"“Jon has not been made any offers. He has made it clear to MF Global’s investors, clients and employees that he is committed to being here well beyond the terms of the covenant," a spokesperson for MF Global said. "On a personal level, he will continue to play a supporting role in the philanthropic and political issues the he cares about."


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