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MF Global Isn't the Only Thing Jon Corzine Has Bankrupted Recently

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Today may be Halloween, but there was a distinct feeling of Groundhog Day on Wall Street, as brokerage dealer MF Global became the first American victim of the mounting European debt crisis and filed for bankruptcy in an eerie echo of the actions of Lehman Brothers in September 2008. Jon Corzine, the ex-New Jersey governor who runs the company, instantly became a trending topic worldwide (and Republicans' new favorite target).

A look at the state's pension funds, though, shows we shouldn't be surprised that the onetime Goldman Sachs CEO led an overleveraged firm to bankruptcy.
In 2010, when Corzine was still governor, New Jersey became the first state ever charged with fraud by federal regulators over its pension funds. According to the SEC, New Jersey did not disclose the fact that two public employee pension funds were underfunded in 79 state bond offerings between 2001 and 2007 worth $26 billion.
“The commission said that from 2001 to 2007, New Jersey claimed to have money set aside in a “benefit enhancement fund” as part of a “five-year plan” to pay for new benefits for teachers and general state employees. In fact, the fund was an accounting illusion and no such money was available,” reported the New York Times in August 2010.
To be fair, New Jersey’s pension woes didn't start with Corzine. According to the Times, the failings in disclosures began under the Republican administration of Donald T. DiFrancesco before continuing under Democrats James McGreevey and Corzine. And Corzine did try to rein in pension costs while he was governor, raising the retirement age from 60 to 62 and tightening requirements for state workers to get pensions.
Undoubtedly to Corzine's relief, New Jersey eventually got off with a slap on the wrist by the SEC, with no state officials or underwriters named in the fraud case. No such luck for the beleaguered CEO this week, though, as he'll surely be facing shareholders' wrath in the fallout of today's bankruptcy filing.
In other Corzine news, the unique portrait of the former governor now hangs on the wall of the New Jersey statehouse for anyone who's curious. Presumably they've ordered extra security for the next month or so.

(See also: MF Global: Good Bets, Bad Timing?)
POSITION:  No positions in stocks mentioned.