Firm at Center of Fed Leak Investigation Is Now Writing for the Financial Times

By Pam Martens and Russ Martens: February 11, 2016 

Congressman Sean Duffy Says Fed Chair Janet Yellen Has Refused to Comply With a Subpoena

Congressman Sean Duffy Says Fed Chair Janet Yellen Has Refused to Comply With a Subpoena

Yesterday during the House Financial Services Committee hearing to take semi-annual testimony from the Fed Chair on monetary policy and the health of the U.S. economy, a tense exchange took place between Congressman Sean Duffy and Fed Chair Janet Yellen. (See video clip below.) Duffy effectively accused Yellen of defying a Congressional subpoena related to a House investigation of a Fed leak in 2012.

The House investigation centers around a quite brazen newsletter put out by a firm called Medley Global Advisors that in 2012 reported what the Fed’s FOMC minutes were going to reveal the following day.  One revelation from the newsletter referred to continued large bond purchases by the Fed as follows:

“Tomorrow’s minutes will reference a staff paper that concludes the market has capacity to absorb purchases this large for a period of time.” When the Fed released its minutes the next day, there was just such a finding.

Dan Bogler Bio at Medley Global Advisors

Dan Bogler Bio at Medley Global Advisors

Medley Global Advisors was sold to the Financial Times newspaper in February 2010. In the press release announcing the deal, Medley Global Advisors was characterized as “a premier provider of macro policy intelligence to the world’s top investment banks, hedge funds and asset managers.”

The month after the deal was announced, Dan Bogler, a 15-year veteran at the Financial Times and former editor of the popular Lex column, became President of Medley Global Advisors.

Today, Bogler is wearing two hats. He is writing articles for the Financial Times under his byline while simultaneously running a firm that sells intelligence to hedge funds and mega global banks. Sometimes his articles at the Financial Times note that he is President of Medley Global Advisors; sometimes they do not.

If, as Senator Bernie Sanders says, the business model of Wall Street is fraud. This sounds like the journalism business model from hell.

The Fed leak that ended up in a Medley newsletter is now also the subject of an investigation by the U.S. Justice Department – which has the power to prosecute criminally. A prior investigation by the Fed’s Office of Inspector General (OIG) has been reopened.

Congressman Duffy and Jeb Hensarling, Chair of the House Financial Services Committee, sent a June 17, 2015 letter to Yellen and the head of the Office of Inspector General of the Fed, raising the concern that the only reason the OIG has reopened its investigation into the leak was to obstruct the House investigation.

In the letter, the two Congressmen revealed the following: “You have both advised that complying with the Committee’s subpoena could compromise the integrity of the OIG’s and/or DOJ’s investigation – but it is the integrity of your previous investigation that is at issue here,” Hensarling and Duffy wrote. “Moreover, your legally baseless refusal to comply with the Committee’s subpoena and records request is compromising the integrity of this Committee’s lawful investigation and oversight.”

When the hearing opened yesterday, Janet Yellen had an unusually tense appearance. It was later revealed that she and the Committee chair, Hensarling, had exchanged communications regarding the subpoenaed documents in the late afternoon the day prior. Yellen perhaps thought it was possible that she was going to be charged with obstruction of justice.

What the House investigation is currently seeking are excerpts from FOMC transcripts that address the Medley leak issue. (Summary minutes of FOMC meetings are released after three weeks but the full transcripts are not released until five years have elapsed.) Yellen told the hearing yesterday that she is concerned about releasing potentially market moving FOMC transcripts. Duffy clarified that they are seeking only excerpts related to this leak.

Fed Chair Yellen Rattles Markets Citing Obstacles to Negative Rates

By Pam Martens and Russ Martens: February 11, 2016 

Fed Chair Janet Yellen Testifying at the February 10, 2016 House Hearing

Fed Chair Janet Yellen Testifying at the February 10, 2016 House Hearing

At 8:00 a.m. this morning, futures on the Dow Jones Industrial Average were flashing a 274 point plunge at the open of the stock market at 9:30 a.m. ET, following a selloff of 99.64 points by the close of trading yesterday.

There’s plenty of things rattling this market, not the least of which is the continued weakness in the share prices of the mega Wall Street and European banks. Analysts have started asking on business news outlets if there is something going on that the public can’t see.

Adding to the market angst was the jumble of questions Fed Chair Janet Yellen received during her semi-annual testimony before the House Financial Services Committee yesterday. One particular line of questioning from multiple members of the Committee was on whether the Federal Reserve has the legal authority to use negative interest rates as part of its monetary policy tools. Central banks in Europe and the Bank of Japan have deployed negative rates and financial markets have a built-in assumption that the Fed could do likewise. Yellen threw a bucket of cold water on that assumption with two revealing remarks.

First, Yellen said that the Fed had looked at the possibility of using negative rates in 2010, explaining:

“We got only to the point of thinking it wasn’t a preferred tool. We were concerned about the impact it would have on money markets. We were worried it wouldn’t work in our institutional environment.”

If you’re a hedge fund and you’ve staked a billion dollar bet on the potential for the Fed using negative rates in the U.S., this is not the answer you wanted to hear.

The words “money market” likely sent both a shiver and an epiphany throughout Wall Street. Why would money markets pose an obstacle to the Fed in embarking on negative interest rates? Because there are a multitude of money market funds in the U.S. that are predominantly holdings of U.S. Treasury instruments. Vanguard, T. Rowe Price, Fidelity, Schwab, JPMorgan Chase, Wells Fargo and many more mega institutions have money markets funds that are designated as “U.S. Treasury” Money Market Funds. The concept behind an interest-bearing money market fund, particularly one whose portfolio is filled with U.S. Government backed Treasury securities, is that it will trade at $1 and will not “break the buck,” thus providing a ready source of liquidity when needed. (Some non-Treasury money markets have experienced losses in the past and broken the buck, but it’s a rare occurrence.)

As of this morning, the 3-month, 6-month and 1-year U.S. Treasury bills are yielding 0.28 percent; 0.37 percent and 0.45 percent respectively. The way T-bills work is that you buy them at a discount and the Treasury pays you par at maturity (full face amount at maturity). Here’s how the U.S. Treasury explains how you get your interest on a T-bill:

“For example, a $10,000 bill may be sold at issue for $9,900. In this case, the investor receives $10,000 when the bill matures; therefore, the interest is $100. The interest is determined by the discount rate, which is competitively determined when the bill is auctioned. It is possible for a bill auction to result in a price equal to par, which means that Treasury will issue and redeem the securities at par value.”

Okay. Fair enough. Right now, according to the U.S. Treasury Department, the worst thing that can happen to you is that you could pay par (the full $10,000) and receive back par (the full $10,000). But if the Fed adopted negative interest rates, you could actually get back less principal than you invested.

One can just imagine what the conservative wing would do to the Fed Chair in these semi-annual hearings if a formal Fed policy of negative interest-rates started confiscating T-bill principal from the accounts of widows and orphans and struggling seniors.

Speaking of seniors, lots and lots of them hold their Treasury Bills, Notes and Bonds at TreasuryDirect, a program where you buy directly from the Treasury and it holds your securities (book entry) for you and will credit your interest to a checking account of your choice. Imagine what would happen if seniors who have been using this program for decades without misadventure suddenly learned that it was not paying them interest and shrinking their principal and it was a result of a formal policy by the Fed.

The Fed not being able to deploy negative rates in the U.S. is a scary thought to financial markets on a number of fronts. First and foremost, the Fed is already close to the zero bound range and thus has little in its arsenal in terms of being able to slash interest rates if the U.S. enters recession. Its existing $4.5 trillion balance sheet, resulting from three prior rounds of quantitative easing (QE) to shore up the economy from the effects of the 2008 crash, is another headwind to getting consensus at the FOMC to launch more QE in a serious downturn.

That the Fed is not seriously considering using negative rates gathered further steam when Congressman Patrick McHenry asked Yellen if the Fed actually had the legal authority to do so. Yellen said that as far as she was aware the Fed had not obtained a formal legal opinion on the matter. Surely that step would have been completed if the Fed was seriously considering this avenue.

More than half way into the hearing, Congressman Ed Royce asked if the inclusion of a hypothetical scenario of the 3-month Treasury bill going negative beginning in the second quarter of 2016, which was included in the Fed’s stress tests scenarios for the systemically important banks, was indicative that the Fed might be considering using negative rates as part of its monetary tool kit. Yellen made two key remarks in this regard. First, she correctly explained that T-bills could go negative in the U.S. without the Fed taking any action. Second, she suggested that this could be the outcome of a flight to safety into U.S. government securities. (See video clip below.)

While Yellen was not specific, that flight into U.S. government securities could actually be either a flight for yield from yield-starved foreigners and/or a flight to safety from growing worries about another global banking crisis.

U.S. Treasury Debt Held by the Public as of January 31, 2016

U.S. Treasury Debt Held by the Public as of January 31, 2016 (Figures are in millions; i.e. total held by the public is $13.657 Trillion Dollars) Source: U.S. Treasury

Exit Polls: 40 Percent of NH Dems Want a President More Liberal Than Obama

By Pam Martens and Russ Martens: February 10, 2016 

CNN Reports That a Stunning 40 Percent of Democratic Voters in New Hampshire Want Policies More Liberal Than Obama's

CNN Reports That a Stunning 40 Percent of Democratic Voters in New Hampshire Want Policies More Liberal Than Obama’s

The world woke up this morning to find that the populist stirrings that were fanned by the leaderless Occupy Wall Street movement, which first galvanized the debate on the wealth and income inequality of the 99 percent, have been simmering in the hearts and minds of voters ever since. Apparently, voters were simply waiting for an authentic presidential candidate to frame their demands into a cohesive message. Yesterday, Senator Bernie Sanders of Vermont crushed Hillary Clinton in the first presidential primary in New Hampshire, taking 60 percent of the Democratic vote to Hillary’s 38.4 percent with over 90 percent of the vote counted.

Donald Trump took 35.1 percent of the Republican vote, with the current Governor of Ohio, John Kasich, coming in at a distant second with 15.9 percent, based on a little over 90 percent of the vote counted. (See full results here.)

No one is exactly sure what message Republican voters are trying to send, although some suspect it’s that they want a billionaire candidate with the guts to talk dirty in public and insult women and minorities – in other words, they want to live vicariously through Trump in an Archie Bunker remake of America. At a campaign rally in Manchester, New Hampshire, just one day before the primary, Trump repeated into the microphone what an audience member yelled out, calling rival Ted Cruz a “p—y.” Trump has also disparaged Carly Fiorina’s face, bizarrely questioning if it rendered her unfit for the White House, while proposing to temporarily ban all Muslims from entering the U.S., which led to a call to ban Donald Trump from entering the U.K. – not the finest moment in diplomacy for the U.S.

One key finding from the exit polls in New Hampshire is that despite billions of dollars spent by the Koch brothers and their ilk in attempts to make the word “liberal” a four letter word, voters are now prepared to stake their claim to the mantle. In the video clip below, a very animated David Chalian, CNN’s Political Director, explains that exit polls among Democrats in New Hampshire yesterday showed that a whopping 40 percent of Democrats want someone more liberal than Obama.

Equally fascinating, David R. Jones, writing for the New York Times, took the same exit polling facts and turned them into a headline that read: “Most Democrats Do Not Want More Liberal Policies.” Technically, that is true. According to CNN, 41 percent want to continue Obama’s policies; 40 percent want a president with more liberal policies; while only 14 percent want someone less liberal. But Obama is already supposed to be a liberal. If 40 percent of Democrats don’t think he’s walking the walk, then what does that say about Hillary’s chances to win this election when she’s on record telling a big crowd at a Women for Hillary event in Ohio last fall that she’s a moderate. Her exact words were: “You know, I get accused of being kind of moderate and center. I plead guilty.” (See second video clip below. To understand where the Times is coming from, read this.)

Other questions in the exit polling spelled more trouble for Hillary. According to CNN exit polls, three-quarters of Democratic voters said they are worried about the economy. Ninety percent said they felt the structure of the economy favored the wealthy. The legitimate fear is that if Hillary gains the White House, she will  appoint guardians of the interests of the wealthy into key posts as Treasury Secretary, head of the Securities and Exchange Commission and U.S. Justice Department – effectively rubber-stamping the gold-plated revolving door between Wall Street and Washington — a replay of the Obama administration in other words.

Politico isn’t helping Hillary’s protestations that money can’t buy her vote. (She’s been silent on whether it can buy cabinet appointments.) Yesterday, Politico’s Ben White wrote an article about Hillary Clinton accepting $675,000 in 2013 for giving three speeches at Goldman Sachs’ functions. One attendee told White that Hillary “sounded more like a Goldman Sachs managing director.” Despite telling debate audiences that she went to Wall Street and told them “to cut it out,” White writes that during the speech Hillary “spent no time criticizing Goldman or Wall Street more broadly for its role in the 2008 financial crisis.”

That’s highly probable. The huge pay for Hillary’s succession of speeches in a short time span for Goldman Sachs came the year after Greg Smith resigned from Goldman Sachs and delivered his exit interview remarks in the OpEd pages of the New York Times, to the horror of the public relations department at Goldman. Smith wrote: “It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as ‘muppets,’ sometimes over internal e-mail,” Smith said. He called the current environment at Goldman “as toxic and destructive as I have ever seen it.”

Perhaps Hillary would understand the inner workings at Goldman Sachs better if she heard it from a woman. Nomi Prins is a highly respected author and speaker and a former Managing Director at Goldman Sachs. In the opening pages of Other People’s Money: The Corporate Mugging of America, the 2004 book Prins wrote after leaving Goldman Sachs, Prins had this to say:

“When I left Wall Street, at the height of a wave of scandals uncovering scores of massively destructive deceptions, my choice was based on a very personal sense of right and wrong…So, when people who didn’t know me very well asked me why I left the banking industry after a fifteen-year climb up the corporate ladder, I answered, ‘Goldman Sachs.’

“For it was not until I reached the inner sanctum of this autocratic and hypocritical organization – one too conceited to have its name or logo visible from the sidewalk of its 85 Broad Street headquarters [now relocated to 200 West Street] that I realized I had to get out…The fact that my decision coincided with corporate malfeasance of epic proportions made me realize that it was far more important to use my knowledge to be part of the solution than to continue being part of the problem.”

Is Hillary Clinton part of the solution in America or part of the problem? The casualness with which both she and Bill Clinton take multi millions of dollars from a Wall Street that has serially defrauded the public and left the country in the greatest economic crisis since the Great Depression, strongly suggests the latter.

No One Wants to Be Fed Chair Janet Yellen This Week

By Pam Martens and Russ Martens: February 9, 2016 

Janet Yellen Appears Before the House Financial Services Committee, November 4, 2015

Janet Yellen Appears Before the House Financial Services Committee, November 4, 2015

Tomorrow, Janet Yellen will scurry over to the Rayburn House Office Building to give her semi-annual testimony to the House Financial Services Committee, now under the control of a deeply paranoid Republican majority when it comes to the Federal Reserve. (Not that some of that paranoia isn’t justified.) There is no question that Yellen will face hostile questioning from Republicans on the Committee, as she has in the past, although the questions tend to venture far afield from the real financial threats to U.S. stability.

Most Democrats, on the other hand, are so wedded to holding up the Dodd-Frank financial reform legislation as their grand achievement after the 2008 crash that they refuse to look out the window and see the equity capital of the Wall Street mega banks currently in a death spiral as the same banks invent ever more creative ways to loot the public and garner its distrust. With this fatal blind spot, House Democrats on the Committee are unlikely to fashion questions hinged to reality.

Thursday may hold out some promise, however. Yellen will present her semi-annual testimony to the Senate Banking Committee, beginning at 10 a.m. Since Republicans took control of the Senate in January 2015, this Committee has been chaired by Richard Shelby. Three Democrats well versed in Fed policy and the workings of Wall Street sit on the Committee: Senators Sherrod Brown, Elizabeth Warren and Jeff Merkley. Warren, in particular, has a penchant for zeroing in on hot button topics that produce nervous squirming from Yellen.

Back on July 15, 2014 when Yellen appeared before Senate Banking to present her semi-annual report, a tense exchange took place between Yellen and Warren. After reminding Yellen that Section 165 of Dodd-Frank mandated that the Wall Street mega banks had to submit annual, “credible” plans to the Fed explaining how they could be quickly liquidated if they got into trouble, rather than requiring another taxpayer bailout, Warren noted how massive some of these banks had become since the 2008 crash. Lehman Brother, said Warren, had $639 billion in assets and 209 subsidiaries when it failed in 2008 and it took three years to unwind the bank. Today, noted Warren, JPMorgan Chase has $2.5 trillion in assets and 3,391 subsidiaries. (The number of subsidiaries is likely a gross understatement since banks are now only required to report key subsidiaries.)

Yellen effectively buried herself by saying that the wind-down plans of some banks are “tens of thousands of pages.” That’s clearly not a “credible” plan since it’s hard to understand even a 100-page prospectus of Wall Street legalese let alone tens of thousands of pages.

Warren responded to Yellen with this:

“I have to say, Chair Yellen, I think the language in the statute is pretty clear, that you are required, the Fed is required, to call it every year on whether these institutions have a credible plan — and I remind you, there are very effective tools that you have available to you that you can use if those plans are not credible, including forcing these financial institutions to simplify their structure or forcing them to liquidate some of their assets — in other words, break them up.

“And I just want to say one more thing about this process, the plans are designed not just to be reviewed by the Fed and the FDIC, but also to bring some kind of confidence to the marketplace and to the American taxpayer that in fact there really is a plan for doing something if one of these banks starts to implode.”

That exchange between Warren and Yellen took place a year and a half ago when bank stocks were in an uptrend. Now, Wall Street bank stocks are plunging and the potential for a mega Wall Street bank to implode has risen dramatically from the shrinkage in the buffer of equity capital. Trillions of dollars more in derivatives exist today on bank balance sheets than were there in 2008 and the public has no clarity on whom the counterparties to this risk are. Investors are voting with their feet and stampeding out of all mega banks.

The Fed has hamstrung itself in terms of options to meet a financial threat by stalling to get off its zero-bound interest rate range until December 16 with its first minor rate hike. Slashing rates periodically in a crisis is no longer a weapon in its monetary arsenal. More quantitative easing hardly seems like an option either since the Fed’s balance sheet has already ballooned from $800 billion prior to the crisis to $4.5 trillion today and has produced only anemic GDP growth.

In the old days, when things got this bad with the banks, J.P. Morgan would simply lumber out his digs and reassure the market that the bank was ready and able to provide liquidity. That was before the 1929 crash and subsequent Senate hearings when the JPMorgan bank was exposed as just another scoundrel on Wall Street.

We have something of the same problem today. After seven solid years of fraud charges and felony counts against the Wall Street banks, there’s no one on Wall Street that the public trusts that can offer any reassuring words. That hasn’t stopped them from trying, however.

The Wall Street Journal is carrying soothing words from Goldman Sachs’ CEO Lloyd Blankfein this morning, who says that the mega banks have stockpiled capital and that “the silver lining is that it represents a substantial increase in safety and soundness, as intended by the regulators.” Goldman Sachs is the firm infamous for creating a $1 billion pile of subprime drek known as Abacus which was designed to fail but it told its clients it was a good investment. So you may want to take what Goldman Sachs has to say with a grain of salt.

Related Articles:

Chasing Down a Fed Leak: Is Jeb Hensarling Fiddling While Rome Burns?

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Fed Officials Are Attending Big Bank Board Meetings? Is This Stockholm Syndrome?

Blowing the Whistle on the New York Fed and Goldman Sachs

Is the New York Fed Too Deeply Conflicted to Regulate Wall Street?

New Documents Show How Power Moved to Wall Street, Via the New York Fed

Relationship Managers at the New York Fed and Citibank: The Job Function Ripe for Corruption

As Citigroup Spun Toward Insolvency in ’07- ’08, Its Regulator Was Dining and Schmoozing With Citi Execs

As Criminal Probes of JPMorgan Expand, Documents Surface Showing JPMorgan Paid $190,000 Annually to Spouse of the Bank’s Top Regulator

New York Fed’s Answer to Cartels Rigging Markets – Form Another Cartel

As Markets Gyrate Wildly, Senator Shelby’s Banking Committee Will Look at Market Structure

By Pam Martens and Russ Martens: February 8, 2016 

Senator Richard (Dick) Shelby

Senator Richard (Dick) Shelby

Senator Richard Shelby (R-Alabama), the Chair of the U.S. Senate Banking Committee, has announced a hearing on March 3 at 10:00 a.m. to examine “Regulatory Reforms to Improve Equity Market Structure.” To appropriately conduct that hearing, all the lights should be turned out in the hearing room and the senators and witnesses should have to fumble and stumble their way to their seats in the dark, since that’s what American investors have been forced to do since the 2008 crash – a tortuously long seven years of make-believe financial reform.

Following the 1929 crash, whose economic impact was also swift and devastating, the Senate Banking Committee spent the years of 1932 through 1934 holding comprehensive hearings and investigations on the structure of the stock market. The hearings unraveled, day by day, the frauds that the Wall Street titans of that era were inflicting on a gullible public. The initiating Senate resolution to undertake the hearings was worded thusly:

“A resolution to thoroughly investigate practices of stock exchanges with respect to the buying and selling and the borrowing and lending of listed securities, the value of such securities and the effects of such practices.”

As each devious fraud was revealed, the details landed on the front pages of newspapers in bold headlines. That provided the strong public momentum for the Banking Act of 1933, known as the Glass-Steagall Act, to separate the fraud-prone Wall Street bankers from the banks taking deposits from savers.

No such scenario played out after the 2008 crash.

What might have prompted Senator Shelby to finally look into the rigged structure of the U.S. stock market after all these years? One word comes to mind first: Hollywood. The movie, The Big Short,  is playing in theatres across America, reminding investors of just how rigged Wall Street is and how the ratings agencies, which delivered the bogus AAA ratings to subprime debt, have yet to be reformed and are still being paid for ratings directly by Wall Street firms. Another movie, Money Monster, starring George Clooney and Julia Roberts, is set for release in May and will showcase more financial crimes against the public.

Nothing gets the public’s attention better than the big screen, especially when markets are also screaming trouble. The U.S. stock market selloff in the Dow Jones Industrial Average and the Standard and Poor’s 500 Index in their first week of trading in 2016, marked the worst weekly start to a year in history. Let that sink in. It was worse than during the Great Depression.

Then there is the seemingly inexplicable selloff in some of the biggest banks on Wall Street – the ones whose regulators keep assuring us are just fine with plenty of capital. Those are the same banks, just as in 1929, that take deposits from savers while simultaneously making high-risk wagers around the globe, thanks to the repeal of the Glass-Steagall Act in 1999. And we are constantly reminded about how little we really know about the operations of these behemoths. The U.S. Treasury’s Office of Financial Research has warned that some of the banks are engaging in capital relief trades to limit the amount of capital they have to hold. But no one seems to have adequate information on who the counterparties are or just how much of this financial massaging is going on.

Nor does the public have transparency on what’s hidden in the over-the-counter derivatives contracts between one Wall Street bank and another. According to the Senate’s Permanent Subcommittee on Investigations, the big Wall Street banks have unprecedented involvement in physical holdings of commodities, but there’s a curtain of darkness around this as well. Add to this the same mega banks’ activities in providing liquidity to Exchange Traded Funds (ETFs) and operating their own dark pools – quasi stock exchanges that trade away from the gaze of regulators – and you have a zero foundation for public trust and confidence in this Wizard of Oz market.

Are the wheels coming off this broken bus? The markets seem to be screaming for help from sane regulators – if any can be found beyond the gilded revolving doors.

Last week, a stock that went public on the New York Stock Exchange in 2011 lost 43.6 percent of its market value in 24 hours — from its close on Thursday afternoon to its close on Friday afternoon. That stock was LinkedIn. Its plummeting price looked like a bungee jumper rather than a liquid, well-functioning market.

On Tuesday of last week, the Securities and Exchange Commission held a hearing to examine what happened on August 24 of last year when the Dow plunged 1,089 points in the first few minutes of trading, only to recover almost half of that loss by the close of trading. There were no solid answers. It is a good bet that small investors with standing stop-loss orders got royally fleeced, just as they did in the Flash Crash of May 6, 2010, which saw a similar plunge and recovery.

The carnage on Monday morning August 24, 2015 included large cap stocks trading on the New York Stock Exchange. JPMorgan Chase had closed at $63.60 the prior Friday. Within a matter of minutes, it had plunged to $50.07, an inexplicable loss of 21 percent. By the end of the day’s trading, the stock had recovered much of the lost ground, closing at $60.25, a far milder 5 percent loss. Other household names like Home Depot, GE, Apple, Ford, Colgate-Palmolive, Merck and Verizon also took a beating on the morning of August 24.

One of the reasons the SEC is stumbling around in the dark and will not be able to provide reliable answers to Senator Shelby’s hearing on March 3 is that despite the Flash Crash in 2010, serial mini flash crashes since then, and the gut-wrenching plunge on August 24, the SEC still has not developed a Consolidated Audit Trail (CAT) so that it can see the real-time flow of orders into the market and by whom they are being placed. The stalling tactics on getting the Consolidated Audit Trail implemented are a national disgrace.

The stock market has opened deeply in the red this morning with Bank of America, Citigroup and Morgan Stanley – three of the biggest and most interconnected banks on Wall Street – all touching new 12-month lows in intraday trading.

Is it any wonder the public wants to throw out the political establishment and start over?

Related Articles: 

The Whites Go to the SEC: Why Wall Street Still Owns Washington 

Is the New York Fed Too Deeply Conflicted to Regulate Wall Street? 

The Untouchables: PBS Asks Why U.S. Justice Department Isn’t Prosecuting Wall Street 

Crisis of Confidence in U.S. Justice Department Grows 

Warren: Citigroup, Morgan Stanley, Merrill Lynch Received $6 Trillion Backdoor Bailout from Fed