The recent economic collapse of MF Global, an international global derivatives broker, has sent shockwaves through the U.S. economic sector. The company’s collapse, the largest Wall Street collapse since the 2008 fall of Lehman Brothers, has been a major blow to the struggling American economy.
However, an unexpected casualty of the company’s collapse has been the American agricultural industry. As investigators probed MF Global’s financial records, they discovered that up to $1.2 billion of customer money is missing from the brokerage’s accounts. MF’s customers included hedge funds, typical investor portfolios, as well as many farmers and agricultural companies.
The collapse, as well as the missing money, has worried many American farmers. In a series of Senate hearings, several agricultural Senators noted the impact of MF’s collapse. According to Max Baucus (D-Montana), who characterized MF’s behavior as “greed without adult supervision,” farmers across his home state are more concerned with the fallout from MF’s collapse then they are about the upcoming Farm Bill debates.
According to John Thune (R-South Dakota), the collapse has damaged faith in the safety of the futures market, which is negatively influencing agricultural business. In a statement during the hearing, Thune claimed, “Hedging is nearly as important as growing a crop.” Senator Debbie Stabenow (D-Michigan), the chair of the Senate Agriculture Committee, has gone on record saying that Congress needs to take up more oversight of American financial institutions to guarantee that farmers can feel safe when they invest.
The failure of MF, and the loss of over $1 billion, has prompted several agencies to begin investigating the collapse. The Commodity Futures Trading Commission and the Federal Bureau of Investigation have both launched investigations into the missing money. In addition, former CEO John Corzine may be subpoenaed by the House and Senate Ag committees.
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Written by: Justin Ellison / Farm Plus Staff Writer