Live Blog: Senate Panel Hearing on MF GlobalBY BEN PROTESS
 Michael Reynolds/European Pressphoto AgencyJon S. Corzine, MF Global’s former chief executive, at a House committee hearing this month into the collapse of the firm.
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WASHINGTON — The Congressional inquiry into MF Global continues, a hearing that will focus on the collapse of the commodities brokerage firm and the disappearance of an estimated $1.2 billion in customer money. Jon S. Corzine, the former leader of the brokerage firm who testified before a House panel last week, is appearing before the Senate Agriculture Committee on Tuesday. Lawmakers will also hear, for the first time, from two of Mr. Corzine’s former top deputies: Bradley Abelow, MF Global’s chief operating officer, and Henri J. Steenkamp, the firm’s chief financial officer.
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1:03 Lunch Break
The hearing is breaking for lunch. We'll be back with more around 2:30.
12:56 Considering Tougher Rules
Amy Klobuchar, Democrat of Minnesota, asks Mr. Corzine whether Congress should enact tougher accounting for brokerage firms. Under current accounting rules, MF Global kept its complex purchases of European sovereigns debt off balance sheet.
MR. Corzine said tougher rules "certainly should be considered," while acknowledging, "I'm not the one who should speak to this."
12:40 A DealBook Shout Out
DealBook gets a shout out!
Senator Kent Conrad, Democrat of North Dakota, cites our recent article that detailed Mr. Corzine's 19-month tenure at MF Global. In particular, Mr. Conrad points to a line that said "The day after the bankruptcy, Mr. Corzine sifted through transactions in the hope of locating the missing money"
Mr. Corzine confirms that fact.
12:37 Not Misconstrued
Mr. Corzine continued: "I never directed anyone at MF Gobal to misuse customer funds. And could he have ordered someone, even accidentally, to misuse customer money? "As far as I'm concerned, I never gave instructions that someone could misconstrue."
12:32 Show Me the Money
Ms. Stabenow creates an emotional moment, demanding to know more from each of the three witnesses.
"Mr. Steenkampo, as C.F.O., Where is the money?"
"Unfortunately I do not know where the money is."
"Well who does?" she asked.
She moves on. "Mr. Corzine, where's the money?"
Mr. Corzine replied, "It's a very very difficult task" to find out.
12:32 Improper Risk Controls
Under questioning from Ms. Stabenow, Mr. Corzine and Mr. Steekamp acknowledged that they would no longer say the firm had proper risk controls in place. Both men previously signed company documents saying the firm's controls were adequate.
"Knowing what we know today, Mr. Steenkamp said, "I would not be able to sign that."
12:12 P.M. Corzine's Deputies
The attention now turns to Mr. Abelow, who calls the bankruptcy a "tragedy for our customers, our employees and our shareholders."
"I am deeply troubled by the fact that customer funds are missing, and I can assure you that I share your interest, and the public's interest, in finding out exactly what happened."
Mr. Steenkamp, the chief financial officer, distances himself from the missing money.
"I was not involved with the details of segregated funds in the course of my duties."
12:09 Mr. Corzine's "Embarrassment"
Mr. Corzine says his "embarrassment" pales in comparison to the pain of MF Global's customers and former employees.
12:07 A New Development
Interesting revelation: He was aware on Oct. 28 that MF Global had overdrawn an account at JPMorgan Chase. The firm transferred some $200 million to make the account whole. Mr. Corzine said he worked to verify with MF Global's back office in Chicago that the transfer of customer money was legitimate.
DealBook first reported the existence of the transfers to JPMorgan last month. As we reported, some investigators fear that MF Global used customer money to even up with JPMorgan.
12:07 P.M. The Missing Money
Mr. Corzine continues to say he is unaware of the whereabouts of the missing customer cash. "I never gave any instruction to misuse customer funds."
12:05 A Slick Suit
Once again, Mr. Corzine is sporting a slick suit. He's better dressed than most people in Washington.
12:00 P.M A Rocky Start
Mr. Corzine's prepared testimony is nearly identical to his words last week. Like before, he starts with apology "to all those affected" by MF Global's downfall.
He reminds lawmakers that he has not had "adequate time and materials to prepare."
11:52 Mr. Corzine, Round Two
The farmers are gone. Next up, Mr. Corzine and his former top deputies.
Mr. Corzine is seated alongside his former employees, Mr. Abelow to his immediate left.
11:35 Victims of Greed
Senator Sherrod Brown, Democrat of Ohio, says the farmers are victims of Wall Street "greed."
He blamed Republicans for weakening regulations that, he said, would protect consumers.
11:33 The Problem With Deregulation
Senator Tom Harkin, Democrat of Iowa, blames "deregulation" for allowing futures brokerage firms to invest customer money in risky assets like European sovereign debt.
The C.F.T.C. last week tweaked the rules to limit those investments.
11:02 An Electric Fence
Now here's an idea: One farmer likens brokerage firms to cows on the farm. He wants Washington to draft tougher rules, or create an "electric fence" to keep the cows on their best behavior.
10:50 The Face of the "Tragedy"
Senator Pat Roberts, the ranking Republican on the committee, notes that the farmers "put a face on this tragedy."
10:40 A.M. A Minnesota Pig Farmer
Now we're hearing from Dean Tofteland, a pig farmer from Minnesota.
He's had a bad few weeks, having lost more than $100,000 in equity from an account at MF Global.
"I have not used the futures market since."
10:33 A.M. Bring on the Witnesses
First up, we have the farmers.
Roger Hupfer is president of Freeland Bean & Grain in Michigan.
His trust in the commodities markets was "shattered by the MF Global bankruptcy."
10:13 A.M. A Call to Order
Senator Debbie Stabenow, a Michigan Democrat who chairs the committee, calls the hearing to order.
She gets straight to the point: "We are left with more question than answers" about MF Global's use of customer cash. "The customers are here still waiting to get their money back."
MF Global's customers include farmers and ranchers. These people, Ms. Stabenow said, "have lost trust in the system."
She makes a good point: "This isn't the dark ages."
10:08 A.M. A Tad Awkward
Always the politician, Mr. Corzine shakes hands with the people around him before taking a seat.
He's sitting in front of Brad Abelow, his chief of staff in the New Jersey governor's mansion who he recruited to be MF Global's chief operating officer. Just a tad awkward.
The accommodations here in the Senate are much more spacious than last week, when a dozen or so reporters crammed into the House Agriculture hearing room.
We're seated across the room from Mr. Corzine. Mr. Abelow is sitting next to his lawyer, Gary Naftalis, or "Columbo with a law degree," as our DealBook colleague Azam Ahmed recently called him.
10:05 A.M. Less Fanfare
Mr. Corzine enters the room to much less fanfare than last week. Only a few photographers take his picture this time. |
