AMY GOODMAN: We’re going to go to Oakland to find out about this first general strike since 1946. But first, from the economy in Europe, we turn now to a major banking scandal here in the United States. On Monday, the commodities and derivatives brokerage house MF Global Holdings filed one of the largest bankruptcies in American corporate history, with almost $40 billion in liabilities. It’s the largest failure on Wall Street since the collapse of Lehman Brothers in 2008.

The chair and the chief executive officer of MF Global Holdings is Jon Corzine, the former New Jersey governor, U.S. senator. Corzine is also the former CEO of Goldman Sachs.

MF Global is also the biggest U.S. casualty so far of the European debt crisis. MF Global filed for bankruptcy in part because of risky bets on debt issued by Italy, Portugal and Spain. MF Global shocked markets last week after disclosing a $191 million quarterly loss. This saw its shares fall by two-thirds and its credit rating cut exponentially. The firm had made big bets on sovereign bonds issued by European countries, but the unsteady future of the eurozone meant investors downgraded the firm’s prospects.

Yesterday, regulators noted MF Global did not separate its customers’ money from its own funds, although required to do so by law. They also said the firm may have transferred hundreds of millions of dollars in customer funds to avoid detection by authorities. In a Bloomberg article called “Others Pay Price for Corzine’s Risky Revenge,” journalist William Cohan writes, “More than three years after the collapse of Lehman Brothers and the onset of the financial crisis, we don’t have in place anything close to necessary regulations to try to prevent companies like MF Global from exploding.”

So we’re going to William Cohan right now. He lives right here in New York City. He’s in our studio, contributing editor to Vanity Fair, author of several books, including Money and Power: How Goldman Sachs Came to Rule the World.

William Cohan, welcome to Democracy Now!

WILLIAM COHAN: Thank you, Amy. Nice to be here.

AMY GOODMAN: The significance of this bankruptcy?

WILLIAM COHAN: Well, I mean, it’s extraordinary—that’s the thing—because it didn’t have to happen. You have a former CEO of Goldman Sachs, albeit he left in 1999, and between now and then he was a senator from New Jersey and a governor from New Jersey, as you pointed out. He hadn’t done, himself, a trade since 1986, so he was somewhat removed. But this was all about his own psychological need for redemption, to get back what he lost by getting canned from Goldman Sachs in 1999, his desire to be a major player again on Wall Street. He decided to swing for the fences, make a huge bet on these European bonds, which, by the way, may turn out to be correct. We don’t know yet, because as you were saying in your previous reports, you know, this is all in flux. However, the markets, once they heard about the size of the bet—and Corzine should have known better, because he’s lived through 2008—once they heard about the size of the bets, they realized that this is essentially a house of cards, and they had lost total confidence in his leadership and his ability to pay their debts when they became due.

AMY GOODMAN: The FBI is now investigating?

WILLIAM COHAN: The FBI is investigating because, you know, one of the no-nos on Wall Street is using your customers’ funds for your own corporate needs. Those are supposed to be segregated. It’s unclear still—I mean, let’s not jump to too many conclusions here. They’re investigating it. It’s unclear. It could be bad accounting. It could be bad reconciliation of those accounts. But at the moment, it’s looking like funds are missing and that they were used—customer funds were used to try to shore up their own internal problems.

AMY GOODMAN: You interviewed Jon Corzine in MF Global, right?

WILLIAM COHAN: Yes, at his offices. He had one—he took over the old offices, and then he moved them to new offices, to Park Avenue Plaza on East 52nd Street, which is a, you know, sort of notorious Wall Street building. And basically, his whole strategy—he was very clear—

AMY GOODMAN: You mean, Occupy encampment is in the wrong place?

WILLIAM COHAN: Well, I would say yes. That’s a whole 'nother subject, but yes. Wall Street is in midtown, not downtown anymore. But Corzine was—we were talking about Goldman Sachs, obviously, in the course of my book, but he was very clear about what he was going to do at MF Global. He was going to take basically a sleepy, backwater—basically a clearing operation and really juice it in terms of risk taking. And this was all a plan. I mean, he, in his—he was brought into MF Global by another former Goldman Sachs senior partner, a guy by the name of Chris Flowers, who is now a private equity—a successful private equity investor, who had been a colleague of Jon Corzine's at Goldman when Corzine was the CEO. This fellow, Flowers, owns about a 10 percent stake in MF Global. He’s one of its biggest investors. And so, he thought bringing Corzine in would, again, help change the strategy, juice the strategy, and encourage the firm to take more risk.

AMY GOODMAN: And what’s Corzine’s relationship with Goldman right now?

WILLIAM COHAN: Well, he’s just an ex-senior partner who, you know, benefited to the tune of something like $300 or $400 million in Goldman Sachs stock when Goldman went public in 1999.

AMY GOODMAN: What about the $700 million that are missing?

WILLIAM COHAN: Well, that number seems to be shifting all the time. But again, that’s the customer accounts. In other words, if I was doing business with MF Global, and I now wanted to get my money out, they’re telling me, “Oh, either your account is blocked, or we can’t get that to you. We don’t know where that money is.” Well, that is a major no-no on Wall Street, and probably criminal if it’s found out that they intentionally did this to cover their own losses on these investments that they made in these bonds.

AMY GOODMAN: I wanted to bring Michael Hudson, the economist, back in to relate what we’re seeing with MF Global to what’s happening in Greece and in Europe right now. Michael?

MICHAEL HUDSON: I was discussing that earlier this morning with a German investment banker, and their belief is that, so far on Wall Street, Wall Street’s been able to have the attorney general they want, Eric Holder, who has refused to prosecute any financial crime on Wall Street at all, as my colleague Bill Black has pointed out. But now, the investment banker told me, it’s very much like The Godfather. Even the Mafia once in awhile has to get rid of one of its own members and sacrifice its own members for the common good. And the European told me that in Europe, it’s really a no-no to use customer funds for your own—to gamble with that at all, that this is so criminal that if there is no criminal prosecution of Corzine, if it turns out that he did take the money, then that is going to lead the European capital markets to withdraw their money from the American capital markets, because the whole—the whole of Wall Street would turn out to be gangsters, without any prosecution, without any rule of law at all. So, this is the moment of decision. Is Mr. Holder going to continue to refuse to prosecute any financial criminal and saying, “Crime is us,” or is he finally going to do—enforce the rule of law on America? Nobody knows over here.

AMY GOODMAN: William Cohan, your response?

WILLIAM COHAN: Well, I think Professor Hudson is a little extreme in comparing Wall Street to the Mafia and gangsters.

MICHAEL HUDSON: I didn’t compare it. That was the Wall—that was the German banker.

WILLIAM COHAN: OK, well, I think that’s a rather extreme position. While it is certainly true that there has been a dearth of prosecution—and I’ve been very outspoken on this. It is a real—that is perhaps the biggest crime here, that there has been no prosecution for any of the Wall Street executives who brought this crisis to our door. Now, with regard to—

AMY GOODMAN: And what’s interesting about that is you’ve had now, in the last few weeks, one of the largest mass arrests in U.S. history, which was of the people who are protesting what Wall Street has been doing, even when it’s on Park Avenue.

WILLIAM COHAN: You know, as I wrote in this book, it’s not what’s illegal that’s the crime, it’s what’s legal. I mean, what—you know, Goldman Sachs operates right to the edge of legality. They know exactly where the laws are, what the legal—the regulations are. Why do they know? Because they helped to write them, as every Wall Street firm helps to write these regulations and these laws—in fact, as they’re doing now. In the wake of the passing of the Dodd-Frank law, the regulations that have been required to be written as part of that Dodd-Frank law, the Wall Street lobbyists, while we’re sitting here now, are busy in Washington, you know, helping to write those new regulations. So they know exactly where the lines are, and they’re very, very careful, often, most of the time, about not crossing them. Sometimes they do. I think, in the case of this crisis, there was a tremendous amount of criminal behavior that has not been prosecuted by U.S. attorneys.

AMY GOODMAN: For governor, senator, Corzine, now head of MF Holdings, which is now bankrupt, lobbied the SEC when they started raising warnings about his company.

WILLIAM COHAN: Well, of course. This is de rigueur on Wall Street. Corporate executives on Wall Street are constantly debating with SEC regulators and CFTC, Commodity Futures Trading Commission, regulators. All of their very—it’s a revolving door between Washington and Wall Street. It always has been. It will continue to be, unfortunately. And as a result, you don’t get the regulation you need. You get the regulation that the Wall Street lobbyists are able to pay for.

And as a result, we, the American people, suffer, because if you’ve noticed, since these firms have gone public, which began in 1970, and they began substituting other people’s money for their own partners’ money, and they were encouraged to take risks with other people’s money as opposed to their own, we’ve had one financial crisis after another. If this were the only one, we could maybe, you know, articulate away the reasons for why it happened. But this is about the 10th crisis that we’ve had since I came onto Wall Street in 1987 and left in 2004. And so, we just continue to have one financial crisis after another. It’s because of the incentive system on Wall Street, that badly needs to change and has not changed one iota, as we just saw with this bankruptcy of MF Global. There’s nothing in the Dodd-Frank law, nothing in the regulations that are being written, that is going to change the incentives. That needs to come, you know, from either internally, because who knows if they’ll ever do that, but, you know, that has—they have to see the light on changing the incentive systems on Wall Street, if we’re going to change people’s behavior.

AMY GOODMAN: And what does it say overall about financial regulation since 2008?

WILLIAM COHAN: You know, I am completely and utterly disappointed by the Dodd-Frank law. I don’t think it—first of all, there’s been no—it hasn’t been at all laid out in terms of how they have to abide by this law. Those regulations are still being written. It hasn’t been implemented. So you’ve got the behavior on Wall Street that hasn’t changed one iota. I mean, the truth is, if MF Global had been too big to fail—fortunately it was not too big to fail, it was too small not to fail—but had it been one of the bigger firms, they wouldn’t have known what to do. They would have, you know, inevitably, gone to rescue it again. At least in the case of MF Global, which did not have to happen, and Jon Corzine should have known better, it was too insignificant for them to bail out, even though it turns out to be one of the largest bankruptcies in corporate history. But its interconnectedness was a lot less than the other firms.

AMY GOODMAN: Money and Power: How Goldman Sachs Came to Rule the World, your final comment on Goldman Sachs in this period of Occupy around the country and around the world?

WILLIAM COHAN: Well, look, I think Goldman Sachs, like the rest of Wall Street, is far from being a perfect organization that we would, you know, want to emulate their behavior. They are no different than any other firm. I think there was a myth created around them that they were somehow different, that they were somehow better, that they were somehow superior. I think we now know that their behavior, as I chart in this book, throughout their history has been dicey at best. Repeatedly, they’ve gotten themselves in and out of trouble throughout their entire existence.

But, you know, I would say that one has to remember that we live in a capitalistic society. And much of the world does, too. If you’re going to have capitalism, then you’ve got to have capital, and you’ve got to have organizations like Goldman Sachs that are in business to take capital from savers, people who have the capital and want a return on that money, to the people who need it all around the world. And that’s what they should be doing, as opposed to gambling with our money. But you need to have that functioning properly for capitalism to exist.

AMY GOODMAN: And Michael Hudson, we just got this word, breaking news, that the Greek prime minister, George Papandreou, is expected to offer his resignation within the next half-hour of this broadcast, sources in Athens have just told the BBC. Your response?

MICHAEL HUDSON: Well, I think the issue is—

AMY GOODMAN: We’ve got five seconds.

MICHAEL HUDSON: —what the man just said: what kind of capitalism are we going to have? Will it be industrial capitalism—

AMY GOODMAN: We’re going to leave it with that question. I want to thank you so much, Michael Hudson, because we just got a report in from Oakland, the general strike, the first in more than a half a century.