U.S. Senator Debbie Stabenow, Chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry, will today introduce a resolution opposing bonuses for MF Global executives. According to news reports, Louis Freeh, the trustee overseeing the bankruptcy of MF Global Holding Ltd., may submit a plan in the coming weeks asking a bankruptcy judge to pay bonuses to top MF Global executives-even though the company is now bankrupt and thousands of its customers' money is still missing. MF Global's bankruptcy last year, the eighth largest in U.S. history, resulted in a loss of as much as $1.6 billion for the firm's customers. Thousands of farmers, ranchers and small business owners are still owed tens or hundreds of thousands of dollars.
"It's absolutely outrageous to suggest that bonuses should be paid to the same people who were in charge when the company went bankrupt and lost its customers' money," Senator Stabenow said. "This was a terrible failure of leadership. The people in charge should be held accountable, not rewarded with bonuses."
On March 15, Senator Stabenow sent a bipartisan letter with all of her colleagues on the Agriculture Committee to Mr. Freeh urging him to drop any proposal to award bonuses to top executives. Mr. Freeh responded on March 16 and declined to commit to the Committee's request. Last December, Senator Stabenow convened a hearing to investigate the collapse of MF Global, where top executives testified and indicated that they didn't know where customer money had gone. Now two of those very executives are among those who may receive bonuses.
New York-based MF Global was in part a Futures Commission Merchant, coordinating the purchase and sale of futures contracts for its customers. Futures are used by farmers, ranchers and business owners to limit business risk by locking in a known price on a commodity that otherwise fluctuates in value. For example, futures contracts can be used to lock in a set price on agriculture products like corn, wheat, or livestock. The Senate Agriculture Committee has jurisdiction over commodity trading as it is used by farmers to hedge risk.