AFR in the News: MF Global provides first test for Dodd-Frank

MF Global provides first test for Dodd-Frank – Ira Teinowitz (The Deal)
November 1, 2011

“It hasn’t taken long for Wall Street to offer up a test case for financial reform. MF Global Holdings Ltd.’s bankruptcy comes just as regulators consider how stringently to implement the Dodd-Frank Act’s Volcker Rule and as Congress considers whether to rewrite the law’s procedures for seizing and winding down failed firms. The implications of the bankruptcy might yet grow significantly. Press reports late Tuesday, Nov. 1, said MF Global officials admitted to regulators searching for assets that some money had been diverted from customer accounts, which if true would generate considerable questions for regulators and Capitol Hill. … Marcus Stanley, policy director of Americans for Financial Reform, a coalition of consumer and labor groups, called the bankruptcy a warning to regulators that the Volcker Rule should be implemented strictly. ‘MF Global’s failure — like the recent proprietary losses by Goldman Sachs — underlines the risks of speculative proprietary bets,” he said. ‘A tough Volcker Rule will restrict this kind of speculation to institutions that are ‘small enough to fail’ and prevent the giant investment banks central to the economy from taking these kinds of risks.’” Click here for more.