Early Friday afternoon, according to congressional testimony by a JP Morgan lawyer, Zubrow alerted Corzine that the overdrafts "had been covered by a series of transfers originating with a withdrawal of funds from a customer segregated account." Given MF Global's desperate circumstances, according to the testimony, Zubrow asked for a written assurance that the $175 million actually came from the firm's cash in the account, not customer funds. The bank sent Corzine a one-page letter for O'Brien to sign.
In his own testimony before Congress, Corzine says O'Brien assured him in a phone call that she hadn't drawn the money from customer funds. She quickly followed up with an email to the CEO showing a record of the second transfer, to London, noting that the $175 million came from a "HOUSE" account. (It made no mention of the original $200 million withdrawal from the customer account.)
But O'Brien refused to sign the JP Morgan letter. After assuring the bank that the withdrawal was proper, MF Global's lawyers—general counsel Laurie Ferber and deputy general counsel Dennis Klejna—tried to get her to sign a revised draft, which sought an assurance that the October 28 transfers represented MF Global's "actual interest in such funds."
O'Brien advised Klejna late in the day Friday that she was "swamped dealing with customer wires," and emailed Ferber that she couldn't deal with the matter until later because "I have numerous moving parts under critical deadlines." After the close of business, Klejna finally spoke to her about the latest draft. "She was able to discuss for less than a minute," he reported back to Ferber in an email. "While it's better she said she wouldn't sign it as is." Klejna passed on this news to the bank. "How did they react"? Ferber asked. "Quite disappointed," Klejna replied.
JP Morgan sent MF Global a third draft of the letter over the weekend, narrowing the language further, but it was never returned.