And the beat goes on. Again, another example of the banking cabal that is supposed to help with the monetary and economic engine of America falling short on its obligations. Just as Big Daddy Fed did, NY Fed decided to keep its mouth sealed regarding the potential damage faced by thousands when they found out MF Global was nothing but a Jerry-rigged piece of shit. So much that price stability Mandate that Daddy Fed has and so much for that precious market confidence Bill Dudley enjoys so much. I figured that if the New York Fed is going to do business with someone that they would stand by the people they transact with:
Mr Baxter maintains the Fed was not MF Global’s regulator and that its designation as a primary dealer “should not be regarded as a kind of ‘Good Housekeeping’ seal of approval”.
The Federal Reserve Bank of New York expressed concerns over MF Global’s internal controls as far back as 2009, more than two years before the brokerage declared bankruptcy in October and an estimated $1.2bn in customer funds was discovered missing.The New York Fed’s reservations led it to delay by one year MF Global’s application to become a so-called “primary dealer” and join a select group of 21 banks and investment firms authorised to trade directly with the central bank, according to written remarks by Thomas Baxter Jr, the New York Fed’s general counsel, who is due to testify before the US Congress on Thursday.Although the Fed eventually approved MF Global’s request, following a visit by Jon Corzine, the broker’s then chief executive, to the central bank’s branch in New York, the Fed’s concerns underscore the depth of regulators’ worries that the company lacked appropriate controls over risk-taking and effective oversight of traders’ activities.The New York Fed’s reluctance stemmed from an investigation by the Commodity Futures Trading Commission, one of MF Global’s government regulators. The CFTC eventually ordered MF Global to overhaul its internal controls and hire an outside consultant to ensure compliance after an alleged rogue trader lost about $140m.MF Global had initially contacted the New York Fed about becoming a primary dealer in December 2008, according to Mr Baxter’s prepared remarks.In April 2009, the New York Fed was informed by the CFTC that there were “several significant control issues” at MF Global and that the broker was in the midst of correcting governance flaws.At the time, the New York Fed told MF Global that the company would not be considered for the prestigious designation.
Over the next several months, MF Global officials pleaded their case and requested meetings with top New York Fed officials, according to Mr Baxter’s written remarks.Then in January 2010, MF Global submitted a formal application. At the time, the New York Fed told the company its request could not be approved until December of that year, one full year after the CFTC’s enforcement action, due to New York Fed policy.
MF Global argued that the regulator’s findings were not “material”, but the New York Fed disagreed. However, during the year it continued to weigh MF Global’s application before approving its request in February 2011.Mr Baxter maintains the Fed was not MF Global’s regulator and that its designation as a primary dealer “should not be regarded as a kind of ‘Good Housekeeping’ seal of approval”.MF Global declared bankruptcy on October 31, following a $6.3bn bet on European sovereign debt, a forced capital raising by regulators, a credit rating downgrade and a record quarterly loss led to a cash crunch that forced the firm into insolvency.Investigators quickly discovered a $1.2bn shortfall in customer funds, which led one of its regulators, CME Group, to declare that MF Global “appears to have broken a number of rules and obligations” regarding the protection of customer accounts.
