Rep. Frank Lucas, Chairman of the House Agriculture Committee, today issued a statement in response to the Commodity Futures Trading Commission's (CFTC) surprise "advisory notice" to further regulate cross-border swaps.
Examination of the MF Global Bankruptcy
Opening Statement of Chairman Frank D. Lucas
As prepared for delivery
Thank you for joining us for this important hearing. I'd first like to thank the Ranking Member and his staff for their help in pulling this hearing together. I'd also like to thank our witnesses for being here.
Each Member of this Committee understands the importance of the futures markets for farmers and ranchers across the country.
For decades, futures markets have been a trusted tool for businesses seeking to manage risk. The bedrock of their trust in these markets is based on the fundamental protections provided by mandatory segregation of customer funds.
This has supported explosive growth and innovation in futures products in recent years, providing farmers, ranchers and businesses throughout the economy with risk management tools. These tools allow businesses to reduce the volatility in the price of goods and services for consumers.
Unfortunately, the very cornerstone of the futures markets, customer funds segregation, has been severely and suddenly called into question.
On October 31, 2011, MF Global Holdings filed for bankruptcy, after revealing that a substantial amount of customer funds were missing. There are now reports that as much as much as $1.2 billion may have disappeared.
Dozens of my constituents have been left not only without their property, but also without answers about why and how this happened. I know my colleagues have all heard similar stories from constituents who now lack confidence in the system that has served them well for years.
Today, this Committee will examine the bankruptcy of MF Global. From the start, I'd like to make it clear that our intent is not to sensationalize the events that have unfolded. And we are not here today to simply or haphazardly point fingers and place blame.
We take seriously that we have asked both the Trustee and the relevant regulatory organizations to appear before us. And we realize that this inevitably diverts their time and resources from the most critical objective at this time: to recover and return to customers the property that belongs to them.
However, it is critical that this Committee shed light on the circumstances surrounding the bankruptcy, to insert additional facts and information into the public domain and to dispel much of the confusion and misinformation that exists.
A deeper and more comprehensive understanding of the facts will put us all in a better position to address this situation and begin to restore confidence in the futures markets. This is the objective of the hearing today.
To that end, last week this Committee took extraordinary action to compel witness testimony that is essential to understanding the whole picture and building a comprehensive record.
I assure you, both the Ranking Member and I do not take this action lightly.
Lastly, it is important to stress that this hearing is not simply a check-the-box exercise. This Committee will continue to monitor the investigation into MF Global's actions and will work to ensure that customers receive fair treatment throughout this process.