Comments on: Was MF Global brought down by an accounting play? http://blogs.reuters.com/felix-salmon/2011/11/02/was-mf-global-brought-down-by-an-accounting-play/ A slice of lime in the soda Thu, 20 Jun 2013 02:11:39 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: JHilt http://blogs.reuters.com/felix-salmon/2011/11/02/was-mf-global-brought-down-by-an-accounting-play/comment-page-1/#comment-32729 JHilt Fri, 04 Nov 2011 03:03:20 +0000 http://blogs.reuters.com/felix-salmon/?p=10893#comment-32729 Am I the only person that thinks this is Refco Part 2. Moving debt around to fool investors. And doesn't MF's executive team have some former Refco executives? Did we really get scammed again by the same people at the same game? Am I the only person that thinks this is Refco Part 2. Moving debt around to fool investors. And doesn’t MF’s executive team have some former Refco executives? Did we really get scammed again by the same people at the same game?

]]> By: Chris08 http://blogs.reuters.com/felix-salmon/2011/11/02/was-mf-global-brought-down-by-an-accounting-play/comment-page-1/#comment-32678 Chris08 Wed, 02 Nov 2011 19:03:20 +0000 http://blogs.reuters.com/felix-salmon/?p=10893#comment-32678 Well very briefly, far far too much debt. Almost always the prelude to disaster. Well very briefly, far far too much debt. Almost always the prelude to disaster.

]]> By: Finster http://blogs.reuters.com/felix-salmon/2011/11/02/was-mf-global-brought-down-by-an-accounting-play/comment-page-1/#comment-32677 Finster Wed, 02 Nov 2011 19:02:50 +0000 http://blogs.reuters.com/felix-salmon/?p=10893#comment-32677 This was a clear liquidity squeeze. Someone knew MF Global was under stress and demanded additional collateral. MF Global as far as we know went as far as posting client funds as collateral to buy more time. It does not matter if this was Lehmann like repo 105 accounting. What matters is that the firm ran larger positions than it could afford. Moving the bonds off balance sheet just made the vulnerability less visible and ultimately obscured what the firm owed and owned at any one time. Maturity matching and liquidity management are banking basics, if you fail at them you deserve to be out of business. And if you fail at them while using client funds as collateral, then you belong into jail. This was a clear liquidity squeeze. Someone knew MF Global was under stress and demanded additional collateral. MF Global as far as we know went as far as posting client funds as collateral to buy more time.

It does not matter if this was Lehmann like repo 105 accounting. What matters is that the firm ran larger positions than it could afford. Moving the bonds off balance sheet just made the vulnerability less visible and ultimately obscured what the firm owed and owned at any one time. Maturity matching and liquidity management are banking basics, if you fail at them you deserve to be out of business. And if you fail at them while using client funds as collateral, then you belong into jail.

]]> By: gauss http://blogs.reuters.com/felix-salmon/2011/11/02/was-mf-global-brought-down-by-an-accounting-play/comment-page-1/#comment-32676 gauss Wed, 02 Nov 2011 18:57:20 +0000 http://blogs.reuters.com/felix-salmon/?p=10893#comment-32676 Totally agree with your analysis. I was puzzled by Bethany McLean's theory as I was reading it. It was nicely written but quite far out. Totally agree with your analysis. I was puzzled by Bethany McLean’s theory as I was reading it. It was nicely written but quite far out.

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