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Tough Questions for CFTC's Gary Gensler as He Heads to Congress to Beg for Money
Submitted by EconomicPolicyJournal.com
It's been just over a year since we noted that CFTC Commissioner Bart Chilton was taking a page from the Hank "Terminator" Paulson script, when he said he might have to "pull the trigger" if the CFTC's operating budget were not increased (in light of its responsibility to implement rulemaking for the fifteen digit notionally valued OTC swaps market).
Well, fourteen months, one MF Global carcass and $1.6 billion in "vaporized" funds later, CFTC Chairman (ex-Goldmanite) Gary Gensler will again go hat in hand to the House Appropriations Committee, Agricultural Subcommittee, this Thursday, March 22, 2012. We wonder, after the $25 million budget increase he scored last year, does the CFTC still regulate the trillion dollar futures markets by fax? According to Reuters, Commissioner O'Malia said in January, 2011 that the CFTC "may run out of room to store data by October because of cutbacks to its technology budget". Hmm, one wonders if the CFTC bothered to purchase those few extra hard drives before it was lights out for MF Global on Halloween day.
Or, perhaps the CFTC has decided to proactively defund its FOIA office, which cannot seem to muster so much as a denial letter to several pending FOIA requests, not the least of which is a request for details of two private meetings on July 20, 2011, one of which was with Chairman Gensler and MFG President Jon Corzine regarding investment of customer funds (the very same day, by the way, that the CFTC announced in the Federal Register that it would delay rulemaking on this very topic).
EPJ's Robert Wenzel wasn't kidding when he wrote in November, 2010 that "Gensler will have the power to make and break firms", and we have to wonder if he's still "tickled pink" about his vast power grab.
Though our personal preference would be for Mr. Gensler to permanently recuse himself, not only from all things MF Global, but from any and all public positions, we do hope the Ag Subcommittee will not spare itself the chance to grill Gensler on a few pertinent items.
Below is Stanley Haar's letter with several excellent suggestsions. Unfortunately, the hearing will not be televised, so we will not get to see "the Gense" squirm as he did when grilled by Representative Huelskamp.
Now, without futher ado...
-EB
# # #
March 16, 2012
Agriculture Subcommittee
Committee on Appropriations
U.S. House of Representatives
Washington, D.C.
Dear Congressman,
It has come to my attention that Gary Gensler, Chairman of the CFTC, will be appearing before your subcommittee on March 22 to request a substantial increase in the CFTC budget for the coming year. As a MF Global customer and a CTA whose business was adversely affected by the illegal transfer of funds from my segregated account at MF, I would like to express my extreme displeasure with the performance of the CFTC under Mr. Gensler’s leadership. I was also very disappointed to learn that the hearing will not be webcast, and request that arrangements be made for the public to view Mr. Gensler’s testimony.
The demise of MF Global and the looting of $1.6 billion from customer segregated accounts represents the biggest regulatory failure in the history of organized commodity trading, and threatens the integrity and viability of U.S. futures markets. I urge you to examine the following questions with Mr. Gensler during the upcoming hearing:
1. MF was clearly under increasing financial pressure for several weeks prior to filing for bankruptcy, as evidenced by ratings downgrades, loss of primary dealer status with the NY Fed and a plunging share price. Why didn’t the CFTC enhance its monitoring of segregated accounts in the days and weeks prior to bankruptcy, either on its own or via the DSRO (the CME)?
2. When MF filed for bankruptcy on October 31, over 99% of its accounts were commodity accounts. Why did the CFTC allow SIPA to take over the bankruptcy? More importantly, why was MFGH (the holding company) allowed to file a Chapter 11 bankruptcy, enabling the continued transfer and scattering of assets to other MF subsidiaries and MF creditors around the world? The bizarre structuring of these two bankruptcies only favored the interests of MF’s general creditors such as JP Morgan, at the expense of customers. Shouldn’t the CFTC be actively protecting farmers, ranchers and the general commodity trading public, not big banks and general creditors?
3. Why didn’t the CFTC immediately move to freeze all MF Global assets, along with the assets of its senior executives, to facilitate the recovery of funds illegally removed from customer segregated accounts? Who at the CFTC handled the decisions related to the bankruptcy, and what communications/contact did they have with the SEC, SIPC, MF management and MF creditors?
4. You are on record stating that CFTC rules require the segregation of customer funds at all times (“every nanosecond”). The amount missing from customer funds ($1.6 billion) represents over ¼ of the entire balance of customer funds at MF and exceeds the total net worth of MF prior to bankruptcy…..clearly not a simple clerical error. Isn’t this prima facie evidence of a criminal violation of CFTC rules? As such, why hasn’t the CFTC already initiated enforcement actions against MF’s executives and directors?
5. The MF Global affair is arguably the biggest crisis for the CFTC since the agency was created. Since you are unable to participate in the investigation due to your long-standing professional relationship and friendship with Mr. Corzine, wouldn’t it be more prudent (and honorable) for you to tender your resignation from the CFTC?
The CFTC clearly failed in its mission to protect the public interest and ensure the proper functioning of commodity markets. They may even have been complicit in allowing the MF bankruptcy to be structured so as to favor big bank creditors at the expense of customers. At the very least, they were "missing-in-action" at critical steps in this process. If the CFTC is unable or unwilling to carry out its mission, why do we even need a CFTC? Perhaps the money needed to fund this agency would be better spent reimbursing defrauded commodity customers, and/or used to reduce the Federal budget deficit.
Regards,
Stanley P. Haar
Haar Capital Management LLC
7280 W. Palmetto Park Road
Suite 102
Boca Raton, Florida 33433
Tel: 561-750-3131
Fax: 561-750-3171
Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
Agriculture Subcommittee Members
Republicans
• Jack Kingston, Georgia, Chairman Fax: (202) 226-2269
• Tom Latham, Iowa Fax: (202) 225-3301
• Jo Ann Emerson, Missouri Fax: (202) 226-0326
• Robert B. Aderholt, Alabama Fax: (202) 225-5587
• Cynthia M. Lummis, Wyoming Fax: (202) 225-3057
• Alan Nunnelee, Mississippi Fax: (202) 225-3549
• Tom Graves, Georgia Fax: (202) 225-8272
Democrats
• Sam Farr, California Fax: (202) 225-6791
• Rosa L. DeLauro, Connecticut Fax: (202) 225-4890
• Sanford D. Bishop, Jr., Georgia Fax: (202) 225-2203
• Marcy Kaptur, Ohio Fax: (202) 225-7711
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And folks the 700 trillion Swaps market is, in part, going to be regulated in this manner. Just fucking perfect.
another money junkie, power grabber JEW
nothing new under the sun
alx
I would like to add Gentsler and Corzine as people who I wish would wander onto my property
I wonder how the fuckhead Gensler is getting along on that silver manipulation thingy....
Fucking Ponzi....the whole regulatory and banking system.
Where the fuck is Jon Corzine and why isn't he in prison?
This Gensler crook must have the easiest job in the world: when you see something illegal happen, just look the other way and don't do anything.
His appointment to this position is proof positive of how corrupted our system is. The equivalent of letting a dozen foxes guard a hen-house.
even worse, just claim the fucking thief was a personal friend and recuse yourself but keep the job
Believe it or not, Gensler is supposed to be one of the good guys...I want to hear why nothing has been done with respect to the segregated account holders at MFG and why Corzine has not been charged with either grand larceny and fraud or gross negligence...then I'll be a believer or not. Apparently when Gensler left Wall Street he had a change of heart and wanted to do something to clean things up. He lost his wife and is raising his kids on his own. Had Hillary won the presidency he was supposed to be her pick for Teasury Secretary; he supported financial reform, unlike the duo of Geithner and Summers. I am at a loss why he has been so silent and that's why I am undecided on whether he is one of the good guys or not...time will tell one way or the other.
I read Susskind's book "Confidence Men" and Gentsler ws maybe the only one in the entire admin who came across favorably. But it doesn't take long for people to get corrupted in DC. Hopefully he does the honorable thing and kills himself
errr. when he left a 20 year career at - ?? ?? guess anybody? sorry. goldman sachs
suckers....
you are right, but didn't someone else just leave GS after 12 years with a change of heart? He wrote a letter...
Gotta love the "parasitic" financial industries!
Tyler, how 'bout a graphic depicting all parasite industries as a percentage of GDP over the last 30 years or so?
"in light of its responsibility to implement rulemaking "
WHEN DID THIS START?
I'm sure he'll get the money from Congress. It's just a cock sucking contest to see who praises each other more before they hand over the dough.
Gensler has a face that you just want to smash your fist into. I'd love to meet him.
So how much money did MF Global steal from you?
Don't forget, he's only 1 commissioner of 5 and they need a 3-2 vote to do basically...anything. So you cannot be 100% sure who's really good or bad on the CFTC. It's all rumor dude.
The only way you can partially tell is these public hearings and decipher who supports who.
He worked for GS. That means he is absolutely a criminal.
Criminal physcopath, I believe you meant.
Prerequisite for employment at GS
That might be denigration of physcopaths .
He did not dissasociate himself from the criminals, which means he is a criminal.
I appreciate the argument, but Ron Paul is running for President, among criminals, and based on existing track records he's the only honest man in my book. So, your logic fails to sway me.
Let me add,
Gensler, you thieving lying SCUMBAG, if in fact you recused yourself due to your longstanding insestuous vile and putrid relationship with Jon "Bozo Cocksucker" Corzine, then HOW come you didn't recuse yourself from ANY and ALL dealings with that prick son of a bitch Corzine it total? The fact that you can just tell the "authorities", "I'm just going to opt out" and they don't investigate EVERY single word you had with that fucking crook is AMAZING that would fly, but it did because the whole system is corrupt. But don't worry you little prick when the lynchmobs form we won't forget you and will make sure you get a noose around your scrawny little pencil neck too you fucking lying crook. And as far as the CFTC is concerned, just do away with it they do nothing, except lie and steal, anyway. Your agency is useless. I hope you choke on the next bagel you stuff into your putrid cakehole.
I'm sensing a little bit of hostility here...:>D
Hey Gens! Where do you have your offshore bank account?
Hey Gens! They are looking for a new Staff Sgt. to go to Afghanistan
In addition to Bales' alleged actions in Afghanistan, Ohio man Gary Liebschner and his wife have come forward claiming that years ago Bales defrauded them of everything when he worked as a broker for a local investment firm and then disappeared right around the time he joined the Army.
Liebschner took his case against Bales and his firm to Wall Street regulators in May 2000, and an independent arbitrator later found that Bales engaged in fraud, unauthorized trading and unsuitable investments.
In the midst of the pending case, Bales joined the Army and Liebschner said Bales could not be found after an arbitrator ordered him and his associates to pay more than $1.4 million.
Asked if it was fair to call Bales a con man, Liebschner said, "I think you've hit the nail on the head." ABC News' Jim Hill contributed to this report.
Stress test by lobbing financial marshmallows upon the banksters backs. Come on. Let the cftc burn to ashes along with the cme and the banksters fraudsters all jiffy lubing ameriCON'd. Getting too obvious who bens over and takes it up the tailpipe consistently. We the sheeple will be left the bag holders of all the irredeemable debt. banksters are buggin out in droves. Why wouldn't the vampire squids begin scattering to the four winds with the types of golden parachutes each has in hand. Can't say when we're checkmated by lil scamBO but all the pieces are in place with the peacetime martial law exec order now in force. 8 trillion plus in deposits, pension, plans, and all things not personal property anymore. rabid wolves been salivating for those funds a long time and now when those assets disappear sheeple shouldn't be surprised the goon platoon has them all locked up.
We already know the answers to most of these questions. Since JP Morgan, the de facto bank and hedge fund of the US government, was on the receiving end of these clients' funds, the money will never be recovered and the issue will be swept under the rug. Gensler's directive is not client protection. Like everyone else at the financial regulatory agencies, he is there to protect banks.
This makes you wonder how the Fed conducted its recent bank stress test. It seems the banks are still under-captitalized if they are allowing theft of client money to go unpunished. It's harder and harder to make money from traditional investments. Stealing is so much easier, and quicker.
This is the problem with debt-based fiat money. Somebody, and in most cases mutiple parties, have the same claim on every dollar, and clients are no longer superior.
ZeroHedge carried a story this AM that the federal government borrows more than 50 cents on every dollar spent. It goes on to question why bother collecting taxes at all. Sen Paul Ryan is proposing a new tax structure. All well and good, but really - fooling with taxes when you are borrowing nearly half to spend.
To the point, some other nitwit (Republican) proposed six months ago to cut the $300 million CFTC budget down to $200 million. That would certainly plug the $1.2 trillion deficit. One might then ask the question - what did the 2008 implosion cost the federal government and/or economy as a whole? Has to be well into the trillions. Good resource allocation there. And don't lets forget that there are some $700 trillion notional of derivatives out there just fermenting. But as long as we are printing $0.50 on the buck, what would be the problem running of a few hundred million more for CFTC? Who would notice?
I believe that the CFTC is self funded. I know that it easily could be. The Nuclear Regulatory Commission certainly is. Please tell me that all of those MF Global customers wondering where their $1.6 billion of equity went wouldn't mind having forked over just $100 billion in management fees in order not to have lost the $1.6 billion.
Gensler's task should be a slam dunk. But don't count on it.
I know a woman way high up in the SEC. The SEC is DEFINITELY self funded. They asked Congress for permission to raise their service fee. Wouldn't have used any additional federal taxes. The Congress said, "No." The SEC had the further audacity to request that their funding be directed from the customers to the SEC. Right now, the funding goes from customers to Congress and then to the SEC - if Congress decides to send it there instead of bridges to nowhere. Congress told SEC to piss up a rope on that as well. And then there was the Brooksley Born massacre.
Having said all of that, does anybody reading this board think for an instant that Congress has any intent to rein in the greatest casino in history? My first time to Las Vegas I was impressed by signs outside the casino stating 'our slots pay $0.95.' IOW, play the slots long enough, and you will lose $0.05 on the buck. I think that the sign outside Wall Street/Congress reads, 'our slots pay 30% - and be grateful.'
Why would congress close the casino? They make their money through a priori knowledge of how the dice will roll.
You know the game is rigged and the house makes the rules. It should be clear to all at this point that the object of the game is to relieve you of your money. If you know these things and keep on playin' the game, I reckon you deserve whatever you get. Jeez! Try investing in something real for a change. You might just change the whole game!
Still in my ears are Ted Butler's adulatory expressions about this person in 2009 and his declaration that 2010 would mark the end of the silver price manipulations.
Excellent questions. But as we all know, the bigger the fraud, the smaller the relative penalty.
This one would seem to be "just right"
How about some guys slap cuffs on this ASSWIPE after or during the meeting and drag his sorry ass away?
He was involved up to his fucking eyeballs in MFG shenanigans.
Dear Stanley,
Because Fuck You, that's why.
Best Wishes
Agriculture Subcommittee
Committee on Appropriations
U.S. House of Representatives
http://tradewithdave.com/?s=Chilton
Hey, Dave. You gotta hand it to Chilton for being eminently quotable.
What do you think the odds are that DK'd CFTC JPM comment was originally posted under his aegis, perhaps right after he came back to the office from the roof of the CFTC?
"Government Commissions invariably cover for government corruption, the Security and Exchange Commission covers for financial corruption, the Medical Commissions cover for Medical Doctors, the State Bar Associations cover for attorneys, and Judicial Commissions invariably cover for all judicial corruption, no matter what the corruption may be. ...
If you want corruption to flourish, create a commission over it, and you will be assured that corruption will abound."
- Rev. Ron Branson, 'Jail 4 Judges', USA
B G in B
I get your point but what 'Medical Commission' are you referring to? As a physician I know of no federal level body that has anything to say about physician conduct. Medicare governs reimbursement but that's about it.
Surely you know of the AMA?
AMA != Govt entity, this you SHOULD know already!
Seems to me that the CFTC budget should come out of funds recovered and penalties from criminal bank and trading fraud.
Gary's salary should also come from penalties and funds recovered from the banks and fraudsters. No penalties and recovered funds, then either there is no need for the agency or no food on the table and no shoes on the kids feet at Gary's house.
Its a great point. This is exactly what the ATF and DEA does: use seized assets from these criminals to fund its own operations.
Just imagine how many millions of our tax dollars could be saved in this way.
Also, allow the Feds to wiretap financial companies that are suspected of crimes, just like they wiretap other perps suspected of other crimes.
And start off by put wiretaps on all of Goldman Sachs and JPM's lines since they are both currently under indictment.
What's fair is fair.