Ripping off the Producers

The story of MF Global has mostly been a cautionary tale of Democratic Party Predators that are just as bad as any Republican variety.  The fact that MF's president Jon Corzine was Obama's top fund-raiser gives those of us who believe that the distinction between Producer and Predator is MUCH more interesting than the difference between Democrat and Republican another fresh infusion of intellectual ammunition.  And the fact that Corzine is a former vampire squid (Goldman Sachs) boss is an occasion for major schadenfreude.

What's not to like?  Well, as it turns out, quite a bit.  MF Global actually had honest customers doing useful work—work that is now in danger because MF Global turned out to be just another bunch of evil Predators.

MF Global fallout hits grain elevators
By Tom Webb
Updated: 11/09/2011

The collapse of MF Global is sending shockwaves across rural Minnesota, where grain elevators and some farmers are stunned to find their commodity accounts threatened by the distant scandal. 

Although relatively few Minnesotans directly used the trading services of MF Global, the failed derivatives broker played a larger behind-the-scenes role in commodities futures trading. That has spread the fallout from the collapse, and some Minnesotans are alarmed to find a portion of their commodity accounts have been frozen - and seem to be at risk. 

"Minnesota's farmers, co-ops and grain elevators trusted this company with their accounts, and it appears that their money was mismanaged and possibly lost," said Democratic U.S. Sen. Al Franken. 

In a letter to federal regulators, Franken said Minnesota elevators are worried that those losses "could put them out of business" and that any "large loss of equity for grain elevators would have cascading effects on rural Minnesota's economy, affecting everyone from large cooperatives to small farmers." 

Federal regulators held a teleconference Wednesday with Franken, state farm officials and representatives of worried elevators and farmers.
Bob Zelenka, executive director of Minnesota Grain and Feed, said 86 percent of the money in affected commodity accounts has been released but that plenty of worries remain. 

"We're still frustrated, and we still have a lot of concerns about recovering 100 percent of our money," Zelenka said, "but they were certainly reassuring that they're doing everything they can do find the rightful owner and get it returned." 

Zelenka said that as far as he knows, "it's a limited number of (Minnesota) elevators that are affected, but the amount of money at stake is pretty large." 

The Minnesotans involved in the mess are innocent victims, Zelenka said. The collapse of MF Global was triggered by the company's disastrous bet on high-risk European debt. Commodity futures accounts should have been isolated from those problems, but that's not what happened. The firm collapsed Oct. 31. 

Franken notes that many of the Minnesotans affected by the collapse had no direct dealings with the company. 

"These elevators held futures trading accounts with other trading firms, which in turn worked with MFGI and the Chicago Mercantile Exchange," he wrote. "Some of these elevators were not even aware their accounts were tied up with MFGI until after the bankruptcy was announced." more