Senator Stabenow Questions Regulatory Oversight Of MF Global

Sen. Debbie Stabenow (D., Mich.) questioned regulatory oversight of failed broker-dealer MF Global and announced a hearing to look into the subject, in a letter to regulators Tuesday.

"The bankruptcy raises a number of questions including the dangers of excessive leverage, the adequacy of existing protections, and the exposures our economy may have to events around the globe," Stabenow said in a letter to Commodity Futures Trading Commission Chairman Gary Gensler.

The CFTC is leading the investigation into nearly $600 million in missing customer funds that regulators say they were told about only hours before the firm filed for bankruptcy.

"That funds are missing highlights an extraordinary breach of trust -- it is unacceptable that there are any doubts about the safety of customer assets," Stabenow said.

Stabenow, chairman of the Senate committee that oversees the CFTC, also announced a hearing on "the oversight of our financial markets."

Stabenow also asked a number of questions about the CFTC's regulatory system for keeping tabs on futures firms like MF Global.

"Are the scope and frequency of audits sufficient to understand the full exposure of firms like MF Global and the risks they may pose to the markets?" Stabenow asked in the letter.

Stabenow also asked whether the self-regulatory system, which gives primary oversight of many futures firms to exchange operator CME Group, was functioning properly.

-By Jamila Trindle, Dow Jones Newswires; 202-862-6684; jamila.trindle@dowjones.com

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