Canseco Addresses Corzine at Financial Services Committee

Dec 15, 2011

December 15th, 2011

Contact:  Valentina Weis
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Canseco Addresses Corzine at Financial Services Committee
MF Global demonstrated as much concern for its risk as did the Captain of the Titanic

Washington D.C. – Congressman Francisco “Quico” Canseco (TX-23), a strong advocate of fiscal responsibility in the House of Representatives and a member of the House Financial Services Committee, delivered the following opening statement at today’s House Financial Services Committee Oversight and Investigations Subcommittee hearing on MF Global:

Thank you Mr. Chairman, and thank you for calling this hearing.

Companies go bankrupt in the United States every day. While I do not believe it is the role of Congress to examine every bankruptcy that occurs in the private sector, the case of MF Global is an exception.

I think it’s hard for Congress to not ask what happened, given that MF Global’s bankruptcy is the 8th largest bankruptcy in U.S. history. It’s extremely important for this committee to examine the consequences for the financial sector of MF Global’s bankruptcy, as well as the impacts that on end-users, such as farmers and ranchers, who access futures markets in order to hedge their risk.

There are also several questions that MF Global’s bankruptcy raises that need to be answered. First, MF Global received a number of regulatory sanctions throughout the years, yet was still allowed to dramatically increase its risk – notably in its exposure to European sovereign debt.

However the most important question that needs to be answered is what happened to $1.2 billion dollars of client money that has gone missing and nobody seems to know what happened to it – the first time customers have suffered losses from the improper handling of customer funds by a clearing member.

The case of MF Global shows not just a failure of company management, which I would say demonstrated as much concern for its risk as did the Captain of the Titanic, but also a profound failure in our regulatory structure that needs to be addressed.

Nine years ago we were told that Sarbanes-Oxley would put an end to accounting gimmickry, and last year we were told that Dodd-Frank would lead to regulatory coordination that would make our financial system safer and sounder.

However, despite the massive increase in the government’s authority, neither of these promises held in the case of MF Global. And yet the private sector continues to pay the enormous regulatory tab of these two bills.

I look forward to hearing from our witnesses today just how this breakdown happened and what can be done to fix it.