>> as i look at that list, that's the list of the countries we have the greatest concern about except to greece. was there a rationale for not trading also in speculating in the bonds of greece as well as the other sovereign nations that i've talked about? >> if one could up a detailed credit analysis of the underlying sovereigns, which not only people at mf global but other financial analysts would have contributed, greece seemed as a country that could potentially with a significant operability go through a restructuring process spent substantially less solvent than the other countries the? >> substantially higher debt to gdp, much more unreliable statistics in which one could -- >> i know the clock is ticking, and i talk faster than most of the folks in this capitol, but the investment in the other countries, wasn't made with the anticipation that greece would be bailed out? >> the investments in those five countries were made because there was a judgment, as i said, it was a challenge judgment both by people and -- >> was part of that judgment greece was likely to be bailed out? >> the answer is no to the. >> i would just go back to some of the other history that sticks in my mind here. the news reports about the investments in new jersey and lehman brothers shortly before the economic situation we all know so well in the fall of 2008, do you have an aspirin or a number on how much money was lost over that investment in the lehman brothers but shortly before the fall, if i can refer to that? >> i don't recollect the amount of loss eric and as i think -- >> will you be in the rate of $100 million? >> it may very well have been, but i would suggest that we had an investment department that was separate from the government department. >> then when governor christie alleged there were hundreds of millions of dollars that were transferred in the last hours before he was sworn in as governor of new jersey and that you have spoken to him and promised him he had a $500 million surplus going in, turned out to be less than that. i think he said in his report, $2.2 billion but i think you at 500 that that comes direct $2.7 billion in shortfall. i want to give you an opportunity publicly to respond to the. i don't think i've seen a response in the media. >> first of all, i think my former treasurer did respond to those numbers, and there is a difference about the timing on when one was making those judgments and i would have to go back and prepare myself to speak to that. >> would you state though that the current governor's allegations are substantially correct or incorrect? >> i don't accept the analysis exactly as he has explained it. there was a growing shortfall, as you know, in the winter of 2009 and 2010. the economy was falling dramatically, and revenues were falling, and estimates with regard to what revenues would be collected were off in most states spent and perhaps a compulsion to take risk. thank you, mr. chairman. i yield back. >> the gentleman's time has expired. mr. cardoza. >> thank you, mr. chairman. mr. corzine, governor corzine, my grandmother, an immigrant in this country in the 1920s, did not benefit from our fantastic education that both you and i benefited from, used to give me some great advice. she would admonish the day when she was still alive to always do the right thing when no one was looking. can you, sir, tell us today that while you've been ahead of this organization, mf global, that you always did the right thing when no one was looking? >> every effort, and 10 in my actions, were to do the right thing. >> the wheels start coming off your company, did you set up a war room to try to deal with the financial crisis and figure out what was going on? did you bring your folks around you in the corporate room? how did you handle yourself at that point? >> there were constant meetings, including with the board. >> that's what i asked the question. and my next question is, there was a point in time where you got the first inkling that there was a substantial amount of money that had disappeared, been stolen, we don't know what happened to it. that's one of the things that happen. at that very second that you get the first inkling that there was substantial loss in your corporation and that you're going to be held liable, or your company was going to have to take a tremendous hit, what was the first thing you thought of him did? did you call the police? did you run to the bathroom and threw up? i mean, to me lose a billion or $2 billion. >> congressman, in those late hours, and i think i said this earlier, to the other question, really was disbelief, stunned disbelief that this could be the case, when many hundreds of millions was reported to be missing. and go back and check your work, what is the first response -- >> i understand, but i mean, did you call and tell your cfo, expletive, expletive expletive? where's the money? what was the first thing you did, do you remember the? >> the first thing that follow from this conversation was let's get the people to reject the figures, make sure that we have done everything we can to appropriately confirm what you're suggesting. it wasn't, it was, it wasn't as if all expectations had been closed. there was still a hunt that i probably would have gone to the restroom and thrown up myself. thank you for the answer. a few years ago when i first came to congress i introduced an ethics bill that said if you break the public trust, as a member of congress, as a member of the public societies, police officer, any portion of the publics trust and you commit a crime in that public trust, and this came in response to my dealings with ken lay from enron and california as a state legislator, i said you should do double the penalty. we passed that bill in the house picked it didn't get through in the senate, but i just am having looked back on your career in government and in business, because i think the price of business is low. when you're in a position of public trust, do you agree with me that we have a higher standard to the public? and if we don't rebuild a public trust in our governmental and business institutions, that we're going to have a very difficult time in this country to succeed in the future? >> i do agree with you, congressman, and as an elected public official, the oath of office that i have taken, deeply impact how i tried to address the efforts i fulfilled when i served in those offices. and i believe that to tell the truth, as you know it, is a responsibility of all of us. and certainly one of those issues that i believe the public is concerned that they don't get a fair shake on today. >> thank you for your answer and thank you for being here. >> the gentleman's time has expired. the chair now recognizes the gentleman from texas, mr. noggle bauer for five minutes. >> thank you, mr. chairman. mr. corzine, i want to go back to some earlier testimony because i think the question was asked you, did you authorize the transfer of funds from the sake of your accounts to other places. and you didn't, the anti-gay was no, i did not. you said i never intended to violate any rules. so i -- >> i would repeat that in the context that there were people who handle the transfer of funds, and i'm not one of those. there are people -- >> that wasn't the question. the question was, did you ever in the heat of the moment in those last days when you were trying to sell this company tried to keep his company afloat, to make the transfer, hopefully pull the rabbit out of the hat, did you ever authorize any of your people -- >> i never intended to authorize anyone. >> so you never intended to, but you may have? >> if it did, it was a misunderstanding because there is no intention under any context that i can think of that i was authorizing tapping into segregated funds. >> so the answer that you get to this question, so i don't want to mischaracterize it is, is you give orders and you don't know what you get it or not? >> nonot? >> no, that is not, not what, since i don't have access to records or phone records or anything that i could rely upon, i can only say i know i had no intention to ever authorize the transfer of segregated monies. >> so the answer is, is you don't know whether you did or not? >> i certainly couldn't confirm based on what i have available to me today, that i know what my intentions are. >> earlier in the year you were granted primary dealer status by the federal reserve bank of new york, is that correct? >> yes, sir. >> you are proud of the fact you all were able to achieve that. there some reports, and again as you said there's a lot of reports out there, on a conference call you were extorting the fact that you would be able to take the company to a new level with the status. what was the strategy that being a primary dealer would give you? >> congressman, i don't, i don't recall framing it the way you are suggesting. as a matter of fact, it would be in my view inappropriate and probably would have been criticized by the fed if i had. now, i asked a question on calls, what does it mean to have primary dealer status. it does mean that you have access at the financing arrangements with some clients that you might not otherwise have. you have the ability to transact business with people around the globe that you would not otherwise be able to transact business with. it does give you the chance when the federal reserve is executing its open market operations to do that directly without having and intermediary to do that, which is certainly constructed. i'm not, i'm not walking away from the fact that it's better to have them not to have, in the context of our clients and others would see you. >> there's only i think 20 companies -- >> i think our 21 today. >> so what would be the criteria? i mean, that's a fairly -- >> i'm sorry? >> that's a very prestigious designation. what is the criteria that your company had that would have caused the fed to give you that status? >> well, first of all the fed test you for a very long time to see whether you're transacting business in treasury securities, agency securities with customers. are you financing customers, are you doing repurchase agreements, reverse repurchase agreements for clients so they can facilitate access to the market. i'm under the impression that they have. i'm under, don't recall the exact number, but they have capital requirements. they review your systems and operations with on site reviews and other things, and i observed your participation in markets. >> do you think it's a little strange that a company that had been showing consistent, consistently losing money which would indicate to me would be, the company that is deteriorating would get such a status to that? >> my own perspective on this is that, that we were at the time, had gone over better part of 18 months, then demonstrating that we were participating with clients at levels that were significantly higher than some of the other people recognized. we have adequate capital, and while him as i indicated in my written testimony, our historical earnings hadn't been so good. they had gotten slightly better. >> but two of your rating agencies, sec and federal, had question with you adequate capital or not. >> those questions came well after the designation, which i believe was early in 2010, finra challenge which in august 2010 if i'm not mistaken and that was in regard to the interpretation of the capital charges were applied to your sovereign. >> the gentleman's time has expired. the chair now turns to the gentleman from georgia, mr. scott, for five minutes. >> mr. corzine, welcome to the committee. i must say at the outset it is really the height of disbelief that you as a former senator, former governor, you're the former head of probably the premier, most prestigious investment banking operation in the whole world. and to sit there and to say that under your watch as executive for $1.2 billion of customers money, you know nothing about it. now, the key, the key to finding out where my constituents money went, i represent georgia, a lot of farmers. they are sitting here watching trying to figure am i going to get my money back. the key to this issue. you're the ceo. now, mr. corzine, who at mf global was ultimately responsible for determining which products the company invested in on its behalf? now, i would think that you as the ceo, am i right about that? >> ultimately the board of directors at the recommendation of management, which i was the lead manager of the, makes those decisions, delegate authority and then the company operates within those authorities. >> tell me this. what did you do at this company? wasn't run by the board? who made these decisions? who made the decision -- >> decisions are always on the recommendation, and i take full responsibility for the recommendation that went before that board. i tried to say otherwise, and so those investment decisions are ones that, particularly as it relates to the european sovereign rt imposition, rests on my judgment. >> rest in your area. now explain to me when you came in, you make that decision, you had been in the company a relatively short prayer time. and when you came in, your holdings in foreign sovereign debt was about 1.5 billion. and 11 months, that was as of october fletcher. now october of this year, that holding has ballooned up to $6.3 billion. and foreign sovereign debt at a time with each of these foreign companies that you're getting the debt are teetering on disaster. was that your decision? >> i take responsibility for that decision. in my oral statement, congressman, i tried to give, i mean in my written statement, some perspective on why i thought it was at the time that we took those decisions. somewhat difficult how one might assess it. >> mr. corzine, did you cominco customer funds with proprietary fund's? >> the -- >> yes or no speakers on going to answer this question the same way, there is never any directed intent to cominco those funds. >> snored you could have. drop is hearing i can count the time the word you use never intent, not to my knowledge, not to iraq on the, never intended to. and i understand the position that you are in, but mr. kowsar and, we've got to find that money. we've got to get at $1.2 billion get it back out to our customers and to my clients into my farmers in georgia. and as i said before, we've got to get better answers than this from you because you are the ceo. let me ask you this, mr. corzine. did use client funds to pay for or to pay off mf global's debt and bolster the 6.3 billion purchase of sovereign european debt that led to your bankruptcy? >> i'm going to repeat what i said before. i have no recollection whatsoever of client monies being used, the client monies out of that fcm to be used to purchase sovereigns. the europe sovereign position held in the broker-dealer spent did you ever use your customer funds to buy foreign sovereign debt? >> client dollars that were in the fcm, to my knowledge, were not financed out of the fcm. >> then why did you lobby the cftc against proposed changes to the cftc regulation that would have prevented futures commission from and testing customer funds and obligations and foreign governments? if he never did that, never intended to do that, why did you when you want to put tighter controls on that? >> the meeting that you're referencing, i presume, is the july 20 meeting with mr. gensler. actually of the conference call, was about the percentages that, concentration percentages, actually i was more in support of the cftc's recommendations, that they should be modified a bit but i was more in support of, and it related to the interim repurchase agreements that cftc just ruled on this last monday. >> and if you want the one responsible or had a role in playing about the misappropriation and the loss of this $1.2 billion, somebody is. who would that be? >> the gentleman's time has expired. the witness my answer. >> as i've said repeatedly, we've had people, policy and procedures, and as i have said in my testimony, i don't know whether this is inadvertent. i don't know whether in the flows of transactions that were occurring and there were more flows of transactions and typically occur at mf global in the last chaotic days, whether someone held onto some of the funds that were rightfully to have been delivered to a mf global. i, i, without being able to look in detail into those records, those are options. and i don't, i don't have the ability other than to speculate where they would be. >> the gentleman's time has expired. >> thank you, sir. >> the chair now recognizes the gentleman from texas, mr. connolly, for five minutes. >> you've testified that you were not an expert in all aspects of any business, no one really does. but help us understand your appreciation for the duty that fcm's have to maintain segregated accounts. wasn't something you are aware of? >> yes or spent was a summit in our position that when the report was prepared, the next morning after yesterday's close of business, that was out of whack, there jobless, and she down and show that you? did the issue of segregated funds rise in your mind's? >> if they were an outage it would be brought up, and exception. >> would that have been something yo you would have been made aware of or is that someone else in your organization? >> if there would have been an unreconciled circumstance, i believe it would have been raised to my attention. >> just trying to get a sense of how important mf global's team felt sucker your accounts were. that's the one area of this aspect that we are supposed to be paying attention to. in terms of tone from the top, many organizations take on the attitude of their leadership with respect to compliance, with respect to regulations and those kinds of things. the wall street reporter place you places on sovereign debt which is a totally difficult or station but in the placing of those orders did you go to all the normal routine anybody who has authority to place orders on behalf of mf global would have gone through? >> congressman, i in fact didn't place orders although i worked with traders he would place orders, and i went through normal routines. and we have special compliance oversight of my activities. >> okay, that's helpful. one of the other aspects of leading a broker-dealer in a cup the of a financial services business you're in is liquidity risk. you're not should telling us that you showed up in october. you also had some sense that the second quarter results were not going to be as favorable as you wanted them. >> we were very well aware that either at the end of that second quarter or third quarter, fiscal quarter, that the deferred tax asset was going to have to be at risk specs who you are aware of during july, august, september time frame you have $120 million just on the deferred tax asset. would have to worry about what that is. but the bankruptcy finds that it was really a contraction of the proprietary trading, help drive much of the loss in the second quarter. a given that she knew about the deferred tax -- i don't want to get off on that rabbit trail -- you need liquidity risk, that mf global face and liquidity risk. risk. when did you begin to put in place the steps necessary to protect mf global from and liquidity risk? and then, in october when iraq started happening and if for start of line, margin cost started happening from your customers want their money back. your literature coming thank you these are what we got to do, did you ask them where do we get the money to meet those calls? in other words, we are short $1.2 billion. where were your lieutenants tell you here's how we solve the problem with respect to this liquidity? what were they telling you? where were you getting the m