Friday, December 2, 2011

Who will watch the watchdogs? (Part 2)

"Aw, heck, senator, we don't actually regulate anything, y'know?"

Here's an update on the sketchy government oversight of MF Global, the financial derivatives broker run by Jon Corzine that went belly-up recently with a billion or so of customer money reported "missing"…..

In a followup Reuters story by Christopher Doering and Sarah Lynch on December 2, 2011, the reporters note (with my emphasis):

The U.S. Senate Agriculture Committee is investigating "whether regulators could have done more to prevent the failure and protect investors, traders and farmers who may be out hundreds of millions of dollars."

" Before the collapse, MF Global had nearly a half dozen regulators policing various parts of the firm, including the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission and industry watchdogs such as the Chicago Mercantile Exchange. But no single regulator was responsible for the whole company."

"…why," a senator asked, did MF Global get "clean bills of health just months before its failure and the revelation of its messy books."

"The regulators said their ability to check the firm was limited because they have few resources and are forced to rely on industry watchdogs."

"In the case of the CFTC, the agency does not examine any of the futures commission merchants itself and instead is 100 percent reliant on self-regulatory organizations to oversee them."

The Commodity Futures Trading Commission was established in 1974 as "an independent agency of the United States government that regulates futures and option markets" (see Wikipedia source below). Seems like it does nothing of the kind.

The CFTC apparently presides over presumed self-regulation by the financial entities that it's charged with regulating.

Do we have to say this out loud? That's not regulation in the public interest—that's insidious protection by our government of powerful and wealthy companies/individuals who have repeatedly demonstrated that they're working both stealthily and openly to increase their wealth and power.

My self-interest, and your self-interest, and the public interest of Americans do not get them started in the morning.

"Aw, heck, senator, we don't actually regulate anything, y'know?"

Quis custodiet ipsos custodes?

I'm one of the 99%. How about you?

The CFTC, as it's supposed to be....

The follow-up Reuters story:

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