The MF Global collapse provides an important lesson concerning the effectiveness of the principal, or proprietary, banking model. Leading up to the financial crisis, principal banking had replaced slow-growing, client-focused agency banking as the dominant model for large banks. Institutions focused on executing transactions as principals for their own accounts instead of for their clients.

Jon Corzine pioneered this transformation while heading Goldman Sachs in the 1990s. Goldman's apparent success, reflected in stellar returns on equity, lead to envy and imitation that became ruinous to competitors during the 2008-2009 financial crisis. Institutions are now running from Goldman with its single digit ROE and depressed stock price, which trades at a discount to book value.

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