By Tom Lutey
An investment scandal that cost farmers and ranchers more than $1.6 billion should cost the nation's top commodities trade regulator his job, Sen. Jon Tester, D-Mont., said Friday.
Speaking about financial reforms with The Billings Gazette editorial board, Tester said Gary Gensler, chairman of the Commodity Futures Trading Commission, should be fired for the government's role in the collapse of MF Global, a trading house accused of raiding customer accounts to cover bad investments in European sovereign debt. Legally, the customer accounts were "segregated" meaning they should have been off-limits.
MF Global failed despite the cash grab and last October filed a $42 billion bankruptcy, the eighth largest bankruptcy in U.S. history.
"CFTC was asleep at the switch. They were in the building when all that stuff went on, too. Maybe Gary Gensler needs to go," Tester said.
MF Global is currently under criminal and civil investigation. At least three lawsuits seeking class action status, including one filed by Montana farmers, have also been filed.
Though no criminal charges have been filed, MF Global's punishment should be severe, Tester said.
"From what I know about the issue, it's pretty straight-forward. People need to go to jail over it," Tester said.
Gensler has been accused of being asleep at the switch while accounts that should have been regulated were drained by MF Global. The CFTC chairman has also been accused of cronyism. Both Gensler and MF Global CEO Jon Corzine worked for Goldman Sachs. Corzine, a former Democratic senator and New Jersey governor, is alleged to have lobbied Gensler to delay financial reform rules affecting MF Global's handling of customer accounts. And Corzine has become a liability for President Barack Obama, for whom Corzine raised $500,000 in campaign cash during the first quarter of 2011.
Last week, House Republicans wrote the Department of Justice asking that a special independent counsel be appointed to investigate MF Global. The letter, which Tester challenger Republican U.S. Rep. Denny Rehberg signed, calls for the outside investigator to restore trust and confidence, though it didn't suggest Justice Department investigations into the case had been compromised by Corzine's relationships.
Tester said outside counsel might be in order.