Ag Blogs -
Friday, 16 December 2011 18:34
Testimony from a Reno County farmer Tuesday revealed that the rules set
in place for global investment firms, if not followed or enforced, have a
detrimental effect on local business - even in rural Kansas.
C.J. Blew, a Castleton farmer who represented the Moundridge-based Team
Marketing Alliance, told the Senate ag committee that after the
bankruptcy of MF Global, his company couldn't access money in its
accounts. Thanks to safeguards put in place by TMA, the company was
still able to operate normally.
MF Global, a brokerage firm run by former U.S. Sen. and New Jersey Gov.
Jon Corzine, served as a clearinghouse for TMA, which is owned by four
Kansas grain cooperatives, including Mid-Kansas Coop. In that role, MF
Global was required to keep the elevators' funds in segregated accounts
to prevent the misuse and loss of that money.
However, after the bankruptcy, TMA's funds were "missing," which
affected the company's ability to capitalize on futures markets and
their ability to use that money as collateral for loans it needs to
finance its operations.
In the aftermath of the MF Global bankruptcy, more than $1 billion of
customer money was discovered "missing" and potentially lost in the
firm's $6 billion bet on European debt, which proved unstable.
Corzine, also a former executive of Goldman Sachs, made many appearances
on television and on the lecture circuit in the aftermath of the 2008
financial meltdown to talk about the loose regulations governing banks.
Yet at the helm of his own firm, MF Global dismissed regulations
regarding the proper way to handle clients' protected funds.
While the political debate about regulation, over-regulation and
updated, modern regulation will rage on, what is certain is that
enforcement of the current regulations governing investment houses has
virtually no oversight.
As in 2008, the MF Global debacle reveals that investment houses are
more than willing to tap into customers' protected funds to maximize
their profits or as a way to cover investment losses.
Until financial regulators are given the authority and the resources to
effectively enforce regulations designed to protect investors, the
investments of ordinary Americans will continue to be misused and we'll
only know it once the money is "missing."
By Jason Probst/Hutchinson News editorial board