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Thursday, September 29, 2016

MF Global Collapse Recalls 2008 Financial Crisis

The collapse of MF Global shows just how little progress Wall Street regulation efforts have made since the 2008 financial collapse.

MF Global filed for bankruptcy protection on Monday, after succumbing to risky bets on European debt. The manner in which the firm collapsed — due to excessive leverage and proprietary bets — immediately calls to mind the 2008 collapses of companies like Lehman Brothers. According to The Economist, MF Global revealed in its bankruptcy filing that it had “less than $1 billion in equity supporting more than 40 billion in assets, a staggering amount of leverage in an era when financial firms were meant to be ratcheting down risk.”