MF Global fallout

Reuters:   Loophole used by MF Global targeted by U.S. accounting body
"The group that sets U.S. accounting standards proposed tightening an accounting rule that brokerage MF Global used to obscure its exposure to risky European sovereign debt ahead of its bankruptcy filing in 2011... In a repurchase agreement, or repo, a company uses assets as collateral to borrow cash, with an agreement to buy the assets back. Normally, the repos are recorded as borrowings and do not move assets off balance sheets.  MF Global used a variation on repo agreements called a "repo-to-maturity." In a repo-to-maturity, the repurchase agreement expires at the same time that the collateral matures. MF Global recorded the repos as sales, not borrowings, keeping them off the balance sheet.  FASB's proposal would make it much harder for companies to account for those kinds of repos as sales."

So if I understand correctly - MF bought the bonds, repo'd them to maturity, and used the cash that they received from the repo to pay for the bonds.  When the repo expired MF would get the bonds back and have to repay the cash to their lender.  But since the bonds were maturing at the same time they should get a principle cash flow from the bonds which should cover the original amount that they paid for the bonds.  Since this was a repo-to-maturity MF did not have to report the transaction on their balance sheet.  So how could this go wrong?  Well the issuer of the bonds could default (but Corzine was betting that the EU would not let that happen) or..or...if the value of the bonds were to fall during the period of the repo then the cash lender in the repo transaction could call for more collateral - which is what apparently happened.