Congresswoman Chellie Pingree's Committee Questions Jon Corzine
Press Release
Today Congresswoman Chellie Pingree participated in a hearing that the House Agriculture Committee held to question former MF Global CEO Jon Corzine about the corporation's recent bankruptcy.
"There are several issues I am very concerned with," said Pingree. "Of course, there is the question of how $1.2 billion in customers' money could go missing--without even the CEO knowing where it went--and how those funds were used. The whole story of this failure shows that we need a tighter financial regulatory framework and more appropriate levels of funding to allow regulatory organizations like the CFTC to do their jobs sufficiently."
"From the testimony I heard today, it appears that MF Global violated a cardinal rule of our financial system--using funds belonging to customers to cover its own bad bets. It shows that we are still too vulnerable to the kind of risky investments and practices that created the economic downturn. I look forward to discovering exactly how the $1.2 billion of client funds went missing, and what we can do to prevent it from happening again, as the investigations into MF Global's failure continue in our committee and elsewhere," said Pingree.
MF Global was a both a futures commission merchant and a securities and commodities broker-dealer. As early as June 2011, the Financial Industry Regulatory Authority grew concerned about the company's exposure to European sovereign debt. In late October, Moody's downgraded the company's credit rating, citing low earnings and exposure to European debt. The company filed for bankruptcy on October 31 and Corzine later resigned.
Since the bankruptcy, reports have found $1.2 billion in customer money that cannot be accounted for. Questions have also been raised in how the company used customer funds.
The Agriculture Committee has oversight of the Commodities Future Trading Commission (CFTC)--which regulated part of MF Global's services. Though futures now include exotic financial products, they began as ways for farmers to limit their risk to falling crop prices.
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