Regulatory Capture - MF Global Edition

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Today, the Feds approved the MF Global rule - a somewhat long and complicated thingy that basically boils down to brokerages not being permitted to conduct 'in-house repos'.  To translate that down, it basically means that Division A of a firm can't swap out customer's money with securities held in Division B of the same firm.  The point, of course, is that Division B can now go and use that money to Do Stuff That The Customer Might Not Have Wanted, or worse yet, Do Stuff That Division A Is Not Permitted To Do (Legally).

The fun part, of course, is that this was supposed to have happened around a year ago, but it got held up by some pretty intense lobbying by, wait for it, Jon Corzine.

In case you didn't get the punch-line, Jon Corzine headed up MF Global that just went belly up because they were relying on 'in-house repos' for huge chunks of their business...

You have got to love all this...

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