Anyone else find that fiasco amazing? There are two things that I can't wrap my head around: How do you misplace $1 billion? What were farmers and other "regular" people doing depositing their money there? I heard that some people were not even investors, they were just keeping their money there as one would in a savings account. Why the hell would you not go to a FDIC-insured bank?
What's more intriguing is that his attorney allowed him to testify that he has no idea of what happened to all of that money....
The farmers were using MF Global (anyone else think the MF was intentional?) as a broker for their futures hedging account. In order to hedge your corn (or whatever)crop you sell it in the future at the current today price, as per the CBT market. As a small time farmer you can't just go sell it, you need to work through a broker which is no different than trading stocks. What really sucks is these guys accounts were guaranteed segregated from MFG's other business, that is, MFG had no business putting their grubby hands on this money. Of course that guarantee is probably worthless, these accounts are not FDIC backed. Kinda makes you stop and wonder how secure your 401K is, doesn't it?
No worries, the gubmint will bail them out. Profit is personal, loss belongs to the taxpayers. As far as not knowing nothin' bout nothin', it's working fine for Eric Holder. "How could I be expected to know, I was only the guy who made the big bucks for being in charge?"
I guess some/many banks don't want high dollar saving accounts any more. Friends of ours had their bank tell them that they would not accept any more deposits from them. WTF is that about? They had about 600k in there, which is a nice amount but not "big money". Only thing I can figure is that the FDIC limits on (2) single accounts is 200k per for a total of 400k and then a joint account is another 200k for a total of $600k. Whould there be any other reason?
UPDATE: http://www.washingtontimes.com/news/2011/dec/27/mf-global-chief-missing-12b-financial-adviser-epa/
Update: The lawsuits will last a decade http://abcnews.go.com/Blotter/farmers-sue-jon-corzine-missing-millions/story?id=15321298
Corzine needs to go to prison....never happen. Maybe, just maybe the farmers will get pennies back on the dollar, if they can hang in there long enough. Of course that will be Corzine's lawyers' tactic, wait them out and hope they go broke. :down:
This kind of stuff needs to be punished with impunity. Crap like this that just disappears into the fray without recourse reflects poorly on the rest of us in the financial industry who aren't crooks. Throw Corzine in jail and lose the key.
No one is going to jail because "re-hypothecation" [reusing over and over [leveraging] colateral if I understand it] .....is legal! http://www.calculatedriskblog.com/2011/12/mf-global-and-rehypothecation.html
"A million here, a million there, pretty soon you're talkin' about some real money." I can't remember who that is usually attributed to, but it is still applicable.
It was a billion here, a billion there...... and it's considered a popular myth that was attributed to Sen. Dirkson.
