Three Lessons From the Collapse of MF Global

In today's politically charged atmosphere, it's nice to occasionally find a situation in which everybody wins. And that's exactly what we have with the collapse of MF Global. Politically, this failure unites both liberals and conservatives. Liberals can rejoice, rightly, that Wall Street's pushback against the "Volcker Rule" - the provision in the Dodd-Frank act that said banks should not engage in proprietary trading - has been exposed as completely spurious. And conservatives can rejoice in the come-uppance of a man who represented the worst of modern Wall Street's obsession with trading and flirtation with left-of-center politics. Indeed, Jon Corzine turned Goldman Sachs Group Inc. (NYSE: GS) from a respectable corporate finance house into a dodgy trading-dominated casino. And, as if that weren't bad enough, he pushed New Jersey to the edge of bankruptcy. What a career! Of course, apart from enjoyable schadenfreude on both sides, there are lessons to be learned. But before we get to exactly what those lessons are, we must first perform an autopsy on MF Global to see exactly what went wrong.