The Collapse of MF Global

YankeeFan · Nov 4, 2011

Azrael said:

. . .
Which is exactly what OWS was founded to protest.

www.adbusters.org/blogs/adbusters-blog/occupywallstreet.html

. . .we demand that Barack Obama ordain a Presidential Commission tasked with ending the influence money has over our representatives in Washington. It's time for DEMOCRACY NOT CORPORATOCRACY, we're doomed without it.

- July 13, 2011

Oh, well a Presidential Commission -- appointed by the President who's received more money from Wall St. than any other President in history will solve everything.

Maybe Chris Dodd can chair it.

We don't need a fucking Presidential Committee. We have all of the laws and regulations in place that we need. We just need them enforced thoroughly, fairly, and uniformly.

There was very likely criminal activity at MF Global. And, if there was, folks will likely go to jail -- just like at Enron, and at any number of other companies.

But, also, what happened at MF Global did very little damage to the economy as a whole. It's barely a blip on the radar. It didn't and won't change the life of one slacker in Zuccotti Park.

And, it needs to be repeated, the only way to reduce the influence money has over Washington is to shrink Washington. A smaller Government with less money, and less control over our lives will not be worth buying influence from.

But, a Government that controls health care, housing, car companies, student loans, etc. is a magnet for corruption.

When the Federal Government can invest billions of dollars in worthless "green energy" companies like Solyndra, it's a beacon for people looking to buy influence.

If that's what OWS is about, sign me up.

LongTimeListener said:

Yf -- that is exactly what I'm referencing, the fact that regulators won't investigate these matters. That is very much what OWS is about, at least the parts of it that are coherent enough to be about something.
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I'd love for this to be what OWS is about. (Though I'd still frown on most of the tactics.) But it's not.

It's an anti-Capitalist movement. It's about wealth distribution. It's about confiscatory taxes on the wealthy.

They want to end our current banking system. They want to give more power to the government to tax and distribute wealth.

Fighting corruption and crony Capitalism? Sure, I'm for that.

Let these folks take the lead? No way. They're ideas are immature at best, and have failed everywhere they've ever been implemented.

We don't need new laws, new regulations, or new Commissions. We just need to enforce what we already have.
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LanceyHoward · Nov 4, 2011

The Big Ragu said:

They tapped client cash and hid the activity. Nuff said. People will try to conflate it with Wall Street in general, but that is criminal. It's no different than any kind of theft or fraud.

Also, they were at about a 40 to 1 leverage ratio, which I personally have no problem with. If they want to throw risk management out the window and inevitably destroy their business, that should be their problem. They don't deserve to exist. But we do supposedly have a securities and exchange commission "regulating" that.

I suspect when your lead guy is Jon Corzine, who walked through the revolving door, you don't get scrutinized, for fear of pissing off a guy who can get you fired with a phone call. This is why they barely looked at Bernie Madoff for all those years, even when there were serious warning signs

Lastly, it was interesting yesterday watching Ben Bernanke talk his way around MF Global, saying the Fed is not its regulator, the SEC is. Just 8 months ago, though, the Fed added MF Global to its list of 22 primary bank dealers. This was the firm the Fed felt stable enough to conduct its monetary policy through (which is the thing that screws American most, and doesn't get talked about). It's not surprising, though. The Fed is conducting these giant bond transaction as it runs on its little hampster wheel, to try to inject more and more money into our system (which is destroying the dollar and making things worse), and it needs more and more primary dealers to unload all of that debt. So I am sure their screening process just looks at assets, and no one actually bothers to check out the balance sheets of the companies they choose to work with. Look how that worked.
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And are 40 to 1 leverage levels illegal now? Seriously?

Comingling funds had been for a long time but is excess leverage against a reg? I have not read Dodd-Frank but I thought that that now the regulators can now express concern about excess leverage but there is no hard and fast rule such as a 16 to 1 leverage ratio. I think, given the disaster that occurred when the SEC allowed the Big Five investment banks to run themselves into the ground we need something like that.

YankeeFan · Nov 11, 2011

A thousand jobs gone:

The court-appointed trustee overseeing the liquidation of MF Global’s broker-dealer unit laid off 1,066 employees on Friday, keeping only a skeleton staff to assist in the dissolution of the business.

http://dealbook.nytimes.com/2011/11/11/mf-global-lays-off-vast-majority-of-broker-dealer-employees/?hp
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YankeeFan · Nov 13, 2011

The $633 million in missing client funds from Jon Corzine’s now-bankrupt firm MF Global appears to be a result of a “massive hide-and-seek ploy,” a US Commodity Futures Trading commissioner said yesterday.

“This isn’t just a lost-and-found inquiry; it’s a full-on effort to get to the bottom of what appears to be a massive hide-and-seek ploy,” said CFTC commissioner Bart Chilton said in disclosing the MF investigation.

“It’s a distinct possibility, some would say probability, that somebody has done something with the money, and that it’s not going to be ‘all of a sudden discovered’ with an innocent explanation,” Chilton wrote. “If that’s the case, it’s patently illegal. I don’t know yet. Our investigation will uncover that, and we’re aggressively pursuing this.”

Read more: http://www.nypost.com/p/news/business/mf_game_of_hide_seek_eiuxClKBQeeUo47hlHpxlN#ixzz1dbGYOTFP
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The Big Ragu · Nov 13, 2011

Of course it was illegal. They used clients' funds to try to hide proprietary losses they couldn't cover because they were leveraged to the hilt.

LanceyHoward · Nov 13, 2011

The Big Ragu said:

Of course it was illegal. They used clients' funds to try to hide proprietary losses they couldn't cover because they were leveraged to the hilt.
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Are you referring to comingling funds which I agree is illegal. I was referring to the leverage ratios. Is it still legal to have a leverage ratio of 40 to 1?

YankeeFan · Nov 21, 2011

This keeps getting worse, and the odds of Corzine landing in jail keep going up:

The court-appointed trustee overseeing the liquidation of MF Global’s brokerage now estimates that the shortfall in the firm’s customer funds could be more than $1.2 billion, double previous estimates.

Regulators currently suspect that MF Global improperly used customer money for its own purposes in the days before filing for Chapter 11 protection, according to people briefed on the matter.

http://dealbook.nytimes.com/2011/11/21/mf-global-trustee-estimates-shortfall-could-be-more-than-1-2-billion/?hp
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Stitch · Nov 21, 2011

YankeeFan said:

This keeps gettig worse, and the odds of Corzine landing in jail keep going up:

The court-appointed trustee overseeing the liquidation of MF Global’s brokerage now estimates that the shortfall in the firm’s customer funds could be more than $1.2 billion, double previous estimates.

Regulators currently suspect that MF Global improperly used customer money for its own purposes in the days before filing for Chapter 11 protection, according to people briefed on the matter.

http://dealbook.nytimes.com/2011/11/21/mf-global-trustee-estimates-shortfall-could-be-more-than-1-2-billion/?hp
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NY Times calls it a shortfall and the Washington Post says the money is missing. Those headlines don't imply the same meaning.

http://www.washingtonpost.com/business/trustee-in-mf-global-case-says-12b-in-customers-money-missing-twice-what-firm-said/2011/11/21/gIQAfRhBiN_story.html

YankeeFan · Dec 2, 2011

A congressional panel has subpoenaed former Sen. Jon Corzine to testify next week about his role leading MF Global, a brokerage firm that collapsed this fall after a disastrous bet on European debt.

The Dec. 8 hearing will be a rare moment in Washington. Congressional historians and Capitol Hill insiders can't recall another time when a former member of Congress was summoned by his former peers to testify about a matter under federal investigation.

http://hosted.ap.org/dynamic/stories/U/US_MF_GLOBAL_CORZINE_CONGRESS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-12-02-11-05-22
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YankeeFan · Dec 5, 2011

Newt must be laughing at the paltry sums Bill is charging:

A former MF Global employee accused former president William J. Clinton of collecting $50,000 per month through his Teneo advisory firm in the months before the brokerage careened towards its Halloween filing for Chapter 11 bankruptcy.

Teneo was hired by MF Global’s former CEO Jon S. Corzine to improve his image and to enhance his connections with Clinton’s political family, said the employee, who asked that his name be withheld because he feared retribution.

“They were supposed to be helping Corzine improve his image as a CEO—I guess you can tell how that went,” he said. Corzine resigned as CEO and chairman November 4.

http://www.humanevents.com/article.php?id=47938
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Uncle.Ruckus · Dec 5, 2011

This thread is still here?

Call me when Corzine gets 2-5 at Danbury.

Football_Bat · Dec 5, 2011

Uncle.Ruckus said:

This thread is still here?

Call me when Corzine gets 2-5 at Danbury.
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Post-Enron and post-Madoff, Corzine won't get off so lightly. Probably eight years in PMITA minimum.

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