It looks like Jon Corzine’s MF Global tried to hide how much risk it was taking on by temporarily lowering borrowing at the end of each quarter, a good Wall Street Journal story shows.
This isn’t a source-driven story. It’s based on the paper’s own analysis of financial filings, which shows that MF Global’s end-of-quarter debt levels were significantly below its average quarterly borrowings for seven straight periods.
This isn’t the first time the Journal has found banks doing this sort of thing. Reporter Michael Rapoport wrote a series of stories last year showing banks like Citigroup, Bank of America, and Deutsche Bank engaged in similar window dressing.
Here’s what he found today:
In each of the past seven quarters, from late 2009 to mid-2011, MF Global’s quarter-end borrowings were an average 16% lower than the quarterly average, according to the Journal’s analysis. The quarter-end numbers were lower than the peak for each quarter by an average of 24%, according to the analysis…
“Every quarter, seven quarters in a row, it’s always lower,” said Charles Mulford, an accounting professor at the Georgia Institute of Technology. “It sounds like they are actively managing their [borrowing] to see that the level is lower when they report to shareholders.”
The Journal is careful to say that this kind of thing isn’t illegal, and its story makes clear that the paper can’t prove conclusively why MF Global’s debt show this pattern.
So it’s jarring to have a cautious, hedged story, with a lede that says MF Global “may have disguised its debt levels to investors by temporarily slashing the debt it was carrying”, underneath a souped-up headline that dispenses with nuance:
MF Global Masked Debt Risks
Consistency would be good here, particularly when your story makes a point of showing that it’s not 100 percent sure of what you say it shows.
Every bank is doing this at the end of every single quarter. They end every quarter with minimal quarterly assets and maximum cash. Look at the second chart here.
http://www.zerohedge.com/news/repeatedly-warned-quarter-end-window-dressing-key-factor-mf-globals-demise
#1 Posted by Anonymous, CJR on Sat 5 Nov 2011 at 12:15 AM
LOL...
So when a Democrat is (or was, before he bailed and lawyered up) running the hedge fund that tries to hide losses... We need "caution" and "consistency" because there's nothing in the story that "conclusive proves" anything.
All of a sudden in Chittumland, we need "conclusive proof" before we spin up the turbines on the Black Helicopters that Ryan regularly dispatches when the thinnest of allegations against a non-Dem "Wall Street" exec is leveled somewhere in the "alt" media
The same man who went so far as to author fiction regarding his mistaken belief that the SEC was conspiring with "Wall Street" to "run out the clock" on criminal investigations of unspecified "Wall Street" misconduct, takes a "nothing to see here" stance on MF Global and Solyndra.
"Professional journalism" at its finest.
#2 Posted by padikiller, CJR on Sun 6 Nov 2011 at 08:16 AM
Jesus Padi, are you that desperate for an angle of attack?
All Ryan's saying is that the title should have matched the story's reporting.
He's not saying "perhaps blah blah is innocent" or "we don't know if blah blah is guilty", he's saying the article avoids assigning motive to a suspicious pattern.
Tell me if I'm wrong Ryan, would a couple of words have fixed the problem?
"MF Global May Have Masked Debt Risks"
Try reading the article before having a spaz.
#3 Posted by Thimbles, CJR on Sun 6 Nov 2011 at 04:47 PM
There is no question that MF Global masked it debt. The headline is entirely accurate and appropriate.
The paper found unequivocal proof of the masking of debt - seven quarters in row where MF Global dumped debt just before the quarterly reporting date.
Ryan concedes the pattern exists and that's all the headline is saying.
The question is whether or not a crime occurred.
If this were any other "Wall Street" venture (aside from Solyndra, of course), Ryan would be slobbering, pitchfork in hand, in his demand of immediate criminal prosecution of the presumed fraud.
But this hedge fund is special. It's run by Democrat. So hands off.
#4 Posted by padikiller, CJR on Mon 7 Nov 2011 at 07:57 AM
Padi, unfortunately for you and your comments and everybody who had to waste time reading your comments, you didn't click through this link in the third graf.
#5 Posted by Ryan Chittum, CJR on Mon 7 Nov 2011 at 11:18 AM
Yeah, Ryan...
The "Wall Street" banks "systematically lowered their debt levels before quarterly reporting periods in order to obscure how much they have". At least so you claimed then.
But now it's "jarring" to see the plain truth in a headline - namely that Jon Corzine's hedge fund did precisely the same thing.
Nope. No bias here!
#6 Posted by padikiller, CJR on Mon 7 Nov 2011 at 11:48 AM
This isn't difficult, Padi. What's jarring is the difference between the "This Happened" headline and the "This May Have Happened" story.
#7 Posted by Ryan Chittum, CJR on Mon 7 Nov 2011 at 12:02 PM
Yeah...
When the WSJ did a statistical analysis showing "window dressing" by "Wall Street" banks, it was, in your words, "excellent work" that proved conclusively that the banks "systematically lowered their debt levels before quarterly reporting periods in order to obscure how much they have". Not only factual guilt, but actual malice (according to you).
http://www.cjr.org/the_audit/wsj_again_pulls_back_the_curta.php
Yet in Jon Corzine's case, when the WSJ conducted a similar statistical analysis and reached the same conclusion regarding the window dressing of his hedge fund - well, well, well... Different story.
Can't jump to conclusions here, people. To do so is "jarring" to the unbiased conscience of a "professional journalist". The numbers don't necessarily mean anything.
Oh... And in Solyndra's case... Nothing to see here, people. Just a case where an honest company lost a little money. Hey! You win some, you lose some. That's how the business cookie crumbles. Move on.
Yep. No bias here, dude.
Not a bit of it.
#8 Posted by padikiller, CJR on Mon 7 Nov 2011 at 12:15 PM