January 11, 2012
When Things Go Wrong
My mother used to say sometimes you need to see what things look like when they go really wrong, in order to appreciate how good you had it when things were going right. Well, we’ve had a few things go really, really wrong in the past couple of months, and it’s made us think about how good we had it.
I’m talking, of course, about MF Global, and how, for so many years, we had the confidence that customer funds were so very well protected by the federal commodities segregated account statutes and regulations. But MFG was a stone-cold, Sumatra-bold, no-holds barred wake-up call—this was a hit to the very heart of who we are as regulators and who we are as an industry. Most importantly, it is now a constant, clanging bell alerting us that we have to change in order to ensure that customer funds—taxpayers’ money—are taken care of, first and foremost, before anything else.
You all know we’re in the middle of that path—we’re tracking down the money, and we’re pursuing, along with other civil and criminal authorities, all available enforcement avenues. At the same time, we need to look at what we can do to change our oversight system to make sure this doesn’t happen again (or, at the very least, to make sure that we’re not making it easier for customers to get ripped off).
In that vein, I’ve got several suggestions I’d like to propose, to further protect American investors and consumers. Specifically, they are:
Lastly, I don’t think we have any time to waste on moving on these ideas. Although we are moving today to consider institution of a more protective “LSOC” regime—which I support—I believe that the lessons of MF Global teach us that we don’t have the luxury of time in making additional progress to protect customers. We need to do more. And we need to do it now.
We had a lot going right for us, for a very long time. But when it went wrong, it went wrong in a big way, and now we have to fix it. My mom’s a smart woman—we should listen to her.
Last Updated: January 11, 2012