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Independent Investigation Required: Did Criminal Activity Lead to Destruction of US Price Stability?

Opinion:

By Mark Melin

The regulated derivative markets in Chicago, New York and around the world offer key mechanisms for price stability.  They offer market participants the opportunity to hedge everything from interest rates to physical commodities.  Around the world a certain type of professional is drawn to the industry: the risk manager.  Many have seen leveraged implosions up close and they typically utilize a diversification strategy with a series of warning tools to provide indication of leverage problems.

It is for this reason damage to the core mechanism of price stability is so critical, particularly at this moment in economic history.  As a debt crisis threatens to implode across Europe, the unregulated Over the Counter (OTC) derivatives that now underlie the financial foundation could lead to serious consequence. The fight being witnessed is really between the forces that have favored unregulated, opaque derivatives fighting a battle against regulated exchange traded products, is one view.  Regardless of the viewpoint, the regulated mechanism of price stability being violated provides a serious backdrop to consider the damage being wrought if known criminal behavior is tolerated.

"Profits are down across the industry with trading volumes, " Mr. Koutoulas observes. "Sophisticated futures customers would prefer counterparty risk with a 'Too Big to Fail bank' rather than an uninsured clearing house." 
"Segregated account protections have proven to be nothing more than a paper tiger by Mr. Corzine's theft. If Corzine is allowed to walk, it sends the message to not just the futures industry, but the entire US financial complex, 'You can just steal customer money.' If a stand against criminality is not taken the integrity of the entire financial system is at stake."

MF Global About Criminality

MF Global is not an indictment of Wall Street, nor an indictment of any one company or firm.  It is an indictment of a criminal minority that apparently have a disproportionate degree of influence.

On Friday, October 26, 2012 a regulator went public for the first time calling MF Global theft. If this clear indication of criminal behavior is not acknowledged by those operating the investigation, it will represent a new low in criminality surrounding Wall Street. 

This isn't a fight against Wall Street or capitalism. It's a fight against the criminal minority.