Tester slams Wall Street bank for enabling MF Global’s ‘shell game’
Senator says JP Morgan Chase helped cost Montana farmers and ranchers millions
(U.S. SENATE) – Senator Jon Tester today blasted leading Wall Street firm JP Morgan Chase, telling its top executive that the bank failed to protect Montana farmers and ranchers who invested with bankrupt brokerage firm MF Global.
MF Global, which traded in commodities markets, misused the assets of over a hundred Montana farmers and ranchers before declaring bankruptcy in October. The company attempted to cover its losses by transferring client funds that are required by law to remain separate and protected.
Tester told JP Morgan Chase CEO Jamie Dimon, whose Wall Street investment firm handled transfers for MF Global, that his company looked the other way when MF Global sought to make up for its risky bets – even after senior JP Morgan executives raised concerns about the transfer.
“Despite repeated attempts by senior risk management officials at your firm to determine whether MF Global’s transfer request was in compliance with the rules, MF Global did not sign the confirmation letter you demanded,” said Tester, the Senate’s only farmer and a member of the Senate Banking Committee. “And yet your firm transferred the funds. Why did JP Morgan Chase relent and allow the transfer?”
After consulting with his lawyers, Dimon joked that MF Global gave senior JP Morgan Chase executives “oral confirmation and then went bankrupt.”
That didn’t sit well with Tester, who demanded to know whether oral confirmation was “general operating procedure” at Dimon’s Wall Street firm.
“You guys knew what was going on with MF Global,” Tester said. “The real question here is whether JP Morgan Chase had any obligation to protect these funds. There were a lot of farmers who hedged to protect themselves from bad outcomes and if this money was transferred – and it was segregated money – there’s a real problem there.”
“I’m just looking out for my folks,” Tester added.
Bankruptcy officials are currently working to distribute remaining MF Global funds to customers, including Montanans. JP Morgan Chase recently released $168 million to MF Global’s bankruptcy trustee – money that will be returned to MF Global customers.
"Montana's hard-working farmers lost millions of dollars due to MF Global's collapse," said Montana Grain Growers President Brian Eggebrecht. “We appreciate Senator Tester fighting for answers on our behalf and standing up for rural America.”
Video of Tester’s Banking Committee hearing is available online HERE.