Editorial: Regulatory dysfunction on show

Congressional testimony yesterday on the collapse of the MF Global Holdings brokerage firm shed little light on the burning question of where up to $1.2 billion in missing customer money might have gone.

But the hearing, before the House Agriculture Committee, underscored once again the excessively fragmented nature of securities regulation in this country. At the time of its bankruptcy filing in October, MF Global was regulated, at the very least, by the Commodities Futures Trading Commission, the Federal Reserve Bank of New York, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Chicago Mercantile Exchange. Now it's being probed by the Agriculture Committee, which presumably focused on MF Global because the firm dealt in farm commodities.

The hearing also demonstrated the cozy ties that often exist between financial regulators and those they regulate. CFTC chairman Gary Gensler, for example, who worked with former MF Global chief Jon Corzine for years at Goldman Sachs, has recused himself from its probe of MF Global. He antagonized lawmakers by not appearing at the hearing.

Corzine, a former New Jersey senator and governor, had the decency not to take the Fifth Amendment during his apologetic appearance yesterday. But the customers whose savings are missing, and the MF Global employees who are now jobless, know all too well that you can't take "sorry" to the bank.