In a marathon House hearing that lasted over eight hours, Congresswoman Marcy Kaptur listened as former CEO of Goldman Sachs and MF Global Jon Corzine testified before the House Agriculture Committee on December 8, 2011.
Mr. Corzine was subpoenaed by the House Agriculture Committee to explain how MF Global collapsed in one of the largest bankruptcies in U.S. history with more than a billion dollars missing from their clients' segregated accounts.
Many agricultural businesses invested in firms like MF Global, so countless farmers, ranchers, and small businesses have lost millions from MF Global's disastrous bets. MF Global is currently under investigation by the FBI and federal regulators. In addition, the firm's shareholders have filed several class-action lawsuits against Corzine and three other top executives for making bogus claims about MF Global's financial health and cash balances. The lawsuits are being consolidated in bankruptcy court.
In response to Mr. Corzine's testimony, Congresswoman Kaptur released the following statement today:
"Hundreds of millions of customer dollars have been lost in reckless trades and only the ongoing bankruptcy proceeding holds hope of beginning to recoup some of their losses.
"I found incredulous Mr. Corzine's contentions that he had 'limited knowledge' of the suspect transactions that moved hundreds of millions of dollars from customer accounts in the days before MF Global filed for bankruptcy.
"Mr. Corzine had worked for Goldman Sachs for 24 years. He, more than most Wall Street investors, held vast knowledge of global trades, from his long association with Goldman to serving as a partner in one of Goldman's spin-off firms like J.C. Flowers, after his stint as a U.S. Senator and Governor of New Jersey.
"I am among those critics who reacted with suspicion and disbelief to his testimony. As others have noted, it is never acceptable to divert money from customers' segregated accounts and it is still fraud, even if the money is found.
"Just as he avoided any first-hand knowledge of the transfers of funds that had caused the firm's failure, Mr. Corzine deflected all questions directed to him regarding his knowledge about the wire transfers of funds from customer accounts for other purposes, knowing that his admission could be used against him in the courtroom, should Corzine ever be charged in a federal case," said Kaptur.
"Corzine is a skilled bond trader with powerful friends. He should have known a 30:1 leverage ratio was highly risky against weaker sovereign European debt. His firm simply didn't have the funds to meet margin calls.
"From data presented at the hearing, it appears that the firm was having difficulty throughout 2011. So, the question must be asked again of Wall Street big money managers: 'Why do you take unnecessary risks with other people's money and what more must Congress do to rein in such reckless behavior?'
"We must begin with more robust prosecution. That is why I have been fighting for an aggressive investigation of financial crimes and introduced H.R. 1350, The Financial Crimes Criminal Investigation Act. This bill will direct the FBI to hire an additional 1,000 agents and additional forensic accounting experts to catch white collar criminals, so they can be brought to prosecution. We simply cannot stand idly by when we know hundreds of millions of dollars can be stolen in the blink of an eye."
Congresswoman Marcy Kaptur has been a strong critic of Wall Street's role in the U.S. economic recession and housing market collapse. She is the senior woman in the U.S. House of Representatives and serves on the House Agriculture, Defense, and Transportation--Housing and Urban Development (HUD) Appropriations subcommittees.