WASHINGTON - When MF Global was on the brink of collapse, chaos and confusion spread not only among the firm's executives in New York but among its regulators in Washington, according to a report released Thursday.
In the final hours before the brokerage firm's bankruptcy more than a year ago, regulators at the Commodity Futures Trading Commission instructed MF Global to transfer $220 million to plug a hole in customer accounts. The firm agreed -- over the objections of the Securities and Exchange Commission and other regulators.
Upon learning of the futures commission's orders, SEC Chairwoman Mary Schapiro, responded in an e-mail to a colleague: "Without telling us? That is unacceptable."
The e-mails of regulators, cited in an "autopsy" report from Republican members of the House Financial Services Committee's oversight panel, portray a "disorganized and haphazard" approach to oversight from federal agencies.
The 100-page report, a public shaming of Obama administration watchdogs, further traced the MF Global debacle to the firm's top executives. Republicans placed blame on the former chief executive, Jon Corzine, a former Democratic senator and governor of New Jersey, who they said ratcheted up a bet on European debt without regard for internal controls or danger to clients.
Rather than rein in his risk-taking, Republicans said regulators gave Corzine a long leash.
"We didn't need additional regulation. We needed regulators actually doing their job," Rep. Randy Neugebauer, R-Texas, who led the investigation as chairman of the oversight panel, said at a news conference Thursday.
Citing "an apparent inability" of regulators to coordinate actions, Republicans suggested investors and customers would be better served if the SEC and the futures commission streamlined operations or combined into a single agency that oversaw all of Wall Street.
But the proposition is fraught with political peril and congressional turf wars. Lawmakers have sought to merge the two agencies for decades, only to scuttle the plans in the face of opposition.
After the financial crisis, as lawmakers debated the Dodd-Frank regulatory overhaul, federal authorities again put forward the idea of combining the agencies. But legislators reached a bipartisan consensus that such a change would spread confusion at a time when the financial industry was barely back on its feet.
On Thursday, federal officials were skeptical of the House panel's suggestions. While some top SEC and congressional officials say they support a merger, others doubt it is politically feasible.
In a somewhat surprising move, Republicans released the report months later than anticipated and without the support of House Democrats.
The report, the outgrowth of several congressional hearings with MF Global's executives and other officials, is the culmination of a yearlong investigation that sought to chronicle the firm's undoing and rebuke those at fault.
The report leveled some of its harshest criticism on regulatory agencies, which it blamed for breakdowns in communication.
The report scolded the CFTC for not informing other regulators that MF Global was using an obscure loophole to tap customer accounts. In an interview with the House panel, an SEC official said the loophole allowed the firm to use customer accounts as an "ATM."
But much of the report's criticism was trained on Corzine, who resisted efforts to curb his authority over the trades.
No one at MF Global has been accused of wrongdoing.
The document is the most significant government effort yet to address MF Global's errors.
Authorities investigating MF Global's collapse are leery of filing criminal charges against the top executives, suspecting that chaos and lax controls -- not criminality -- resulted in millions of dollars in customer money going missing. And while regulators are still pursuing civil enforcement actions, officials have not yet decided to act.