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Bank Shares Plunge as Euro Bonds Infect MF Global

Multiple news reports faulted ""MF Global"":http://www.mfglobal.com/ with fallout for stocks and shares among major lenders Monday as the ""New York Federal Reserve"":http://www.newyorkfed.org/index.html delisted the embattled securities firm.


Several reports credited ""_The Wall Street Journal_"":http://online.wsj.com/article/AP7a6473a28b3e4a858babf60e14192066.html with breaking the news about the firm, as its chief, former New Jersey Gov. Jon Corzine, reportedly sought bankruptcy protection to fend off $6 billion in weak sovereign bonds from European countries.

The Dow Jones industrial average spun into a 276-point tailspin to hit 11,955 points by end of day, taking with it the shares for several mortgage lenders that lifted last week when European leaders announced a bailout package for debt-ridden Greece.

Among the nation's major financial institutions, ""Morgan Stanley"":http://www.morganstanley.com/ fell hardest, dropping by 8.65 percent to crest at $17.64. ""Citigroup"":http://www.citigroup.com/citi/homepage/ followed quickly in a 7.52-percent dip that


closed shares at $31.59 each for the lender.

Of these lenders, ""Bank of America"":https://www.bankofamerica.com/ came next, falling 7.07 percent to tie off shares at $6.83 each, tracked by ""Goldman Sachs"":http://www2.goldmansachs.com/, which fell into the negatives by 5.45 percent to hit $109.55 per share at end of day.

""JPMorgan Chase"":http://www.jpmorganchase.com/corporate/Home/home.htm ranked second-to-last among these, with shares closing by end of day at $34.76 following a 5.26-percent dive. ""Wells Fargo"":https://www.wellsfargo.com/ scraped by the MF Global plunge with a 4.32-percent drop that led it to $1.17 per share by end of day.

A ""_Bloomberg News_"":http://www.bloomberg.com/news/2011-10-31/mf-global-exposes-prop-trading-risk-that-volcker-wants-to-curb.html story on fallout from the securities firm tied its sudden downfall to proprietary trading, reporting that Corzine had bet over $6 billion of the firm's capital on euro bonds.

""Jon Corzine's risk appetite just provided Paul Volcker with a demonstration of the dangers of Wall Street proprietary trading,"" Christine Harper, Michael Moore, and Silla Brush, all reporters with the news service, began their article, referencing the Volcker Rule, a regulation created by the Dodd-Frank Act.

""In the wake of 2008, when we all should have learned a lesson, Jon Corzine told me himself that it was a relatively staid, not risk-oriented firm and he needed to ratchet up the risk,"" _Bloomberg _ quoted William Cohan, author of ""Money and Power: How Goldman Sachs Came to Rule the World,"" as saying.

""Well he does that and it blows up in his face and for the first time he can't unwind the trade. Honestly I'm still shocked and it should not have happened,"" the news service quoted him as adding.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.

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