After a tough week answering questions about his loan to his former employee, career federal prosecutor Michele Brown, Republican gubernatorial candidate Christopher Christie this afternoon tried to change the subject with an offensive on Gov. Jon Corzine, accusing the Democratic incumbent of engineering an income reporting loophole that allowed major corporations like Enron to hide debt.
When Corzine was CEO of Goldman Sachs in the 1990s, Christie said, he was integral in creating Monthly Income Preferred Securities (MIPS), which provided a way for corporations to make debt look like equity, and later lobbied President Bill Clinton in a letter, also signed by 34 others, against reigning the practice in.
“The Governor, as CEO of Goldman Sachs, personally lobbied to get a tax loophole for Enron to make debt look like equity. What this did was contribute, as you all know, to the precipitous fall of Enron when things that looked like equity turned out to be debt,” said Christie during a conference call with reporters.”
The charge is nothing new, however. Corzine faced the same charge four years ago, when he was running for governor against Republican Doug Forrester. At the time, then-Assemblyman Kevin O’Toole (R-Cedar Grove) and state Sen. Diane Allen (R-Edgewater Park) brought it up, saying that “Corzine profited while the people of New Jersey paid.”
Corzine’s campaign responded back then that Goldman had not sold MIPS to Enron since the early 1990s, that they lost the Enron business to another firm in 1994 and that Enron’s problems ate to the 1990s – well after any involvement with Goldman.
Christie said the collapse of Enron, which was able to disguise debt through MIPS, cost New Jersey’s pension fund $61 million, but that Goldman Sachs made $69 million in fees from Enron, a client.
“Jon Corzine does not have a chief executive’s mentality. He has a trader’s mentality,” said Christie.
When asked why he was bringing up something from over a decade ago, Christie said he didn’t think it had been properly vetted.
Corzine’s biography on the Web site for the governor’s office notes that he co-authored the Sarbanes-Oxley Act of 2002, which was meant to crack down on corporate accounting fraud that led to the Enron scandal. One reporter noted that former Senator Paul Sarbanes (D-Md) praised Corzine for his involvement.
Christie, however, said that the reform was equivalent to “closing the barn door that the horse has already ran out of.”
But if Christie wanted to put the Brown loan behind him, most reporters on the call, who were miffed by Christie’s avoidance of questions on the campaign trail after his mea culpa for not reporting the loan on his taxes and several disclosure forms earlier in the week, did not let him. Most questions were still about the loan.
“There is nothing inappropriate about doing that and candidly I think this kind of continued drum beat on this in terms of the propriety of it is incredibly overdone. There is nothing wrong with a superior giving a subordinate a loan,” he said.
Christie said that although he did not make himself available to the press every day last week, he did over the weekend, attending parades in Iselin and Jersey City.
Although Christie gave Brown a promotion to the offices No. 2 spot shortly before he resigned from the post, he said that she did not receive a raise – that, as a 14 year staffer, she had already reached the top salary, which was $100 less than he made as U.S. Attorney. Brown’s bonuses, Christie said, were the same as every other staffer.
“She did not get raises that coincided with her promotions because she was at the top of her pay scale,” he said.