"Good morning and thank you Chairman Lucas.
"As the Chairman said, today's hearing is to review the bankruptcy of MF Global, potentially the eighth largest bankruptcy in history. Given that futures customers, particularly those in agriculture, were affected by MF Global's collapse it is necessary that we hear directly from all those involved and find out who knew what, and when they knew it.
"I want to thank Chairman Lucas for granting my request to have this hearing. The Committee has held plenty of hearings about problems that may or may not occur regarding the implementation of Dodd-Frank. Given the serious problem that currently exists for the thousands of futures customers of MF Global, I think it is appropriate that we refocus our attention.
"After the bankruptcies of Bear Stearns and Lehman Brothers, the subsequent financial collapse in 2008, and the passage of historic financial reform legislation, it is pretty amazing that we're in this situation. It appears to me that no one has learned a thing; that Wall Street is operating as if 2008 never happened. From all accounts, MF Global was leveraged as much as 40 to 1, far higher than either Bear Stearns or Lehman Brothers when they folded. Ironically, it is very possible that there is nothing in Dodd-Frank that would have prevented MF Global's financial collapse. That's why I think we should tread very cautiously before rolling back Dodd-Frank's protections. Given what happened here we should probably be talking about strengthening Dodd-Frank, not weakening it. Three big financial firm bankruptcies over a three year period is not a track record that should be extended.
"During the 2008 financial crisis, futures markets continued to function smoothly. When Refco and Lehman failed, their regulated commodity customer accounts were transferred to other futures commission merchants with no disruption. Wall Street, apparently not content to sully its own reputation, has now stained our well-run futures markets by apparently violating the supreme law -- protection of customer funds.
"The futures industry helps farmers, manufacturers, energy companies, and a host of other industries mitigate risk so they can go about growing, producing, generating, and making the things that make this country run. We need to get to the bottom of what happened with MF Global as quickly as possible in order to restore a confidence that has been greatly shaken. We cannot let one company succeed in undermining an industry that has operated safely for customers for decades.
"Unfortunately, some of my friends on the other side of the Capitol seem hell-bent and ready to assign blame for MF Global to the CFTC for what they perceive as failing to do their jobs. Do we blame the police officer the day after our house gets broken into? Of course not. The futures world operates with a self-regulatory system of oversight because the CFTC cannot afford to put a watchdog into every futures commission merchant. And, if these Members had their way, the Commission would get even less funds than they do now. This blind rush to judgment fails to take into account how the self-regulatory system works, and in my view, undermines it.
"On a personal note, I find the press accounts expressing surprise that the Agriculture Committee could approve something as serious as a Congressional subpoena, unanimously on a bipartisan basis, quite amusing. The Committee's oversight of the futures and derivatives markets is a responsibility that I do not take lightly. On these issues, the Committee-- more often than not -- will work across party lines because when it comes to matters affecting the financial health and stability of our country, partisan games have no place. I know that's not something the press is used to seeing from Congress, but it's how we do things on the Ag Committee.
"Here at the House Agriculture Committee, we are focused on the facts. It is the facts that will tell us what happened, who knew about it, and consequently, who was responsible. Only by uncovering the facts, can we prepare ourselves for policy responses that are necessary to address what has happened. That is what this hearing is all about.
"Again, I thank the Chair for holding today's hearing and am hopeful that today's witnesses will shed some light on what exactly was happening at MF Global."