Media Focus on Trump Blindsides the Public from Rising Wall Street Risks

Source: Federal Reserve Supervisory Stress Test 2017 (Numbers Represent Billions of Dollars in Projected Losses in a Severely Adverse Scenario)

Source: Federal Reserve Supervisory Stress Test 2017 (Numbers Represent Billions of Dollars in Projected Losses in a Severely Adverse Scenario)

By Pam Martens and Russ Martens: June 27, 2017

There are some very serious undercurrents at work in the U.S. financial markets but they are getting short shrift on the front pages of newspapers as the President’s travails dominate the news. That’s working out well for Wall Street, which wants to keep the public slumbering as long as possible in hopes of gutting more financial regulations.

One of those serious undercurrents is the amount of risk being held by the biggest banks in the country. According to the Federal Reserve’s release of its Supervisory Stress Test, of the 34 Bank Holding Companies that are subject to its review, under a “severely adverse scenario,” meaning a deep recession, losses for the combined group are projected to be $493 billion.

Not to put too fine a point on it but that’s just 34 banks out of a total of 5,856 FDIC insured banks in the U.S. according to the FDIC’s March 31, 2017 database. The federal deposit insurance fund as of March 31, 2017 has on hand only $84.9 billion to bail out all banks that go under. That means that if there is, once again, contagion among Wall Street mega banks because they’ve all crowded into toxic debt with derivatives written on top, the taxpayer will once again be dragged kicking and screaming by Wall Street cronies in Congress to bail out the reckless bad boys on Wall Street and their multi-million dollar bonuses — which are somehow sacrosanct even when the recipients have put the nation in financial crisis.

The chart above from the Fed’s Supervisory Stress Test shows just how dangerous and irrational the U.S. financial system has become. The traditional role of banks to lend money to commerce and the consumer to keep the economy expanding and innovating and creating good jobs for Americans has been co-opted by Wall Street’s desire to trade and speculate and, eventually, blow itself up again.

The numbers in the chart above represent billions of dollars of projected losses. The losses from trading events and counterparty losses on derivatives are projected at $86 billion versus $100 billion in projected losses on commercial and industrial loans – the core function of a bank.

Unfortunately, the public cannot trust the projected trading and counterparty losses from the Fed. We know that from the experience of 2008 when the Fed turned out to be the dumb tourist when it came to anticipating the hundreds of billions of dollars in derivative losses hiding in the dark corners of Citigroup and AIG and Lehman Brothers — and Goldman Sachs had AIG not been bailed out. We also know from our previous reporting that the Fed is currently standing down when it comes to reining in derivative risks escalating at the biggest Wall Street banks. (See our related articles below.)

There’s also something specious about how the Fed calculated this $86 billion anticipated trading and counterparty loss. It says “these projected losses are based on the trading positions and counterparty exposures held by these firms on a single date (January 3, 2017) and could have differed if they had been based on a different date.” Why wouldn’t the Fed project losses for a dozen or so different dates and then take the average? January 1 is a holiday and January 3 is just two days into the new trading year when banks are unlikely to have had time to have taken on significant risks.

We reported in March of last year on the concentrated risk for derivative contagion. We wrote:

“…derivatives remain dangerously concentrated, with Citigroup, JPMorgan Chase, Goldman Sachs, Bank of America, and Morgan Stanley holding $231 trillion notional amount of derivatives out of a total of $247 trillion for the top 25 holding companies.

“In the latest report, the OCC [Office of Comptroller of the Currency] attempts to put a happy spin on the fact that credit derivatives have declined to just $7 trillion as of December 31, 2015. But the question the OCC should be asking is who could possibly be a guarantor of $7 trillion in credit derivative bets?…The only conclusion to draw is that Wall Street banks are counterparties to each other on these bets (as the Office of Financial Research has suggested) and/or there is another insurance company, global bank or sucker corporation out there somewhere that is sitting naked with no money to pay off these bets.

“The reason that both the left and right are bemoaning the lack of meaningful financial reform is because it’s a legitimate and urgent matter. The ratings agencies are still taking pay from Wall Street to dole out their ratings. Wall Street banks are still operating unregulated opaque quasi stock exchanges known as dark pools inside their firms. CEO pay is still obscene and incentivized to crime with JPMorgan giving its CEO Jamie Dimon a 35 percent pay boost to $27 million for 2015 after the bank received three criminal felony charges over the two prior years. Cartel activity has now become a business model with global banks, including U.S. banks, charged with colluding on rigging Libor interest rates and rigging foreign currency markets while one trader joked in a chat room that “If you ain’t cheating, you ain’t trying.”

Wall Street is no doubt snickering to itself that Trump is taking media focus away from the serial crimes in the U.S. financial industry. The public needs to demand that major media restore coverage of these vital issues.

Related Articles:

Bailed Out Citigroup Is Going Full Throttle into Derivatives that Blew Up AIG 

Citigroup Has More Derivatives than 4,701 U.S. Banks Combined; After Blowing Itself Up With Derivatives in 2008 

Why Is MetLife Tanking in Tandem With Wall Street Banks? 

The Contagion Deutsche Bank Is Spreading Is All About Derivatives 

Donald Trump Has a Goldman Sachs Problem: Derivatives

Lawyers Representing Bernie Sanders Supporters Fear for their Life

By Pam Martens and Russ Martens: June 26, 2017

Jared Beck of Law Firm Beck & Lee Trial Lawyers of Miami, one of the Law Firms that Brought the Lawsuit Against the DNC and Debbie Wasserman Schultz

Jared Beck of Law Firm Beck & Lee Trial Lawyers of Miami

Jared Beck is not a lawyer likely to file a frivolous motion in Federal court. He’s an honors graduate of Harvard Law School, where he was an editor of the Harvard Law Review, and a Phi Beta Kappa and summa cum laude graduate of Harvard College. Prior to setting up his own practice with his equally impressive wife, Elizabeth Lee Beck, he worked for two prominent corporate law firms where he represented clients like Cadbury, General Motors and Snapple.

Jared Beck is one of the lead lawyers representing supporters of Senator Bernie Sanders in a Federal lawsuit that charges that the Democratic National Committee (DNC) and its former Chair, Debbie Wasserman Schultz, engaged in overt acts to undermine the Sanders’ presidential primary campaign while boosting the prospects of Hillary Clinton as the Democratic Presidential nominee. The lawsuit makes charges of fraud, negligent misrepresentation, deceptive conduct, unjust enrichment, breach of fiduciary duty, and negligence. Under the DNC’s bylaws, it must act in a fair and impartial manner to all Democratic candidates during the primaries.

The lawsuit on behalf of Sanders’ supporters was filed on June 28, 2016. In less than two months, two young men who were potential witnesses in the case were dead. Seth Rich was a 27-year old DNC employee who was shot to death in Washington D.C. on July 10, 2016. Police continue to work on the theory that the murder was a botched robbery, despite the fact that nothing was taken from Rich’s body.

Less than a month after Rich was found dead in the street, Shawn Lucas, the 38-year old who was the process server of the DNC lawsuit, was found dead on his bathroom floor on August 2, 2016. Lucas would have been called as a witness because the attorneys for the defendants claimed his service of the lawsuit had been “insufficient service of process.” Three months after his death, the Chief Medical Examiner’s office determined the cause of death to be: “Combined adverse effects of fentanyl, cyclobenzaprine, and mitragynine.” The manner of death was listed as an “Accident.” See our report on the findings here.

Now Beck and his legal team have told the court they have concerns for the safety of their plaintiffs and themselves. On June 13, the lawyers filed a request with the Federal court for court-ordered protection for the plaintiffs and their families, themselves and their employees, and potential witnesses in the case. The lawyers outlined a series of threatening events that have occurred since June 1 and provided detailed exhibits and sealed documents. The court turned down the request two days later, noting that there were “one hundred fifty plaintiffs in this case, who reside in forty-six jurisdictions, represented by five counsel of record,” thus potentially requiring “the entire United States Marshals Service to direct all of its efforts and attention to this specific case…”

What the request for the protection order did do, however, was send a warning message to those engaging in the harassment that Federal agents might be covertly monitoring the key players in the case.

Related Articles:

Sanders Supporters Stunned by Sudden Death of 38-Year Shawn Lucas Who Served the Lawsuit on the DNC and Wasserman Shultz

Death of Shawn Lucas Brings Attention to DNC Role of Prestigious Law Firm

Shawn Lucas Cause of Death Still Unknown as Clinton’s Campaign Lawyer Tries to Move DNC Lawsuit into the Weeds

Department of Homeland Security Has Surprise for Bernie Supporters at DNC Lawsuit Hearing

Trump Made Calls to Two High Law Enforcement Officials with Jurisdiction to Investigate Him

By Pam Martens and Russ Martens: June 23, 2017

Preet Bharara

Preet Bharara

Former FBI Director James Comey has testified to Congress that he was uncomfortable with the multiple contacts by the President. Comey was fired by Trump after declining to give a pledge of loyalty to the President. Now, official government emails have been released documenting that another top law enforcement official with jurisdiction to investigate Donald Trump and his business associates received “uncomfortable” contacts by the President and was then fired after declining to return a phone call.

Yesterday evening, Jason Leopold and Claudia Koerner, reporters for Buzzfeed, released emails they had obtained under a Freedom of Information Act (FOIA) request to the U.S. Justice Department. The emails documented concerns raised to Justice Department officials by Preet Bharara, at the time the top Federal prosecutor in the U.S. Attorney’s office for the Southern District of New York, over a voice mail left by President Trump’s secretary, Madeline Westerhout, on March 9, seeking a call back to the President. This would have been the fourth contact by Trump to Bharara since Trump’s election win, the prior three having occurred while Trump was President-elect.

Bharara, after consulting with the Justice Department regarding the March 9 contact, called the President’s secretary back and informed her that it was the Justice Department’s advice that he not “speak directly to the President at this time.” Bharara was fired two days later by Trump after refusing a request to resign.

On June 11, Bharara appeared on ABC’s This Week and was interviewed by host George Stephanopoulos. The following exchange was part of the interview according to the official transcript:

STEPHANOPOULOS: You had several encounters with President-elect Trump before you were fired by President Trump back in March starting at the — during the transition he invited you to Trump Tower, asked you to stay on as U.S. attorney.

BHARARA: He did.

STEPHANOPOULOS: And then he followed that up with two phone calls as president-elect.

BHARARA: He did.

STEPHANOPOULOS: What happened in those phone calls?

BHARARA: So they’re unusual phone calls and it sort of — when I’ve been reading the stories of how the President has been contacting Jim Comey over time, felt a little bit like deja vu. And I’m not the FBI director, but I was the chief federal law enforcement officer in Manhattan with jurisdiction over a lot of things including, you know, business interests and other things in New York.

The number of times that President Obama called me in seven-and-a-half years was zero. The number of types I would have been expected to be called by the President of the United States would be zero because there has to be some kind of arm’s length relationship given the jurisdiction that various people had.

STEPHANOPOULOS: What did he say?

BHARARA: So he called me in December, ostensibly just to shoot the breeze and asked me how I was doing and wanted to make sure I was okay. It was similar to what Jim Comey testified to with respect to a call he got when he was getting on the helicopter. I didn’t say anything at the time to him. It was a little bit uncomfortable, but he was not the President, he was only the President-elect.

He called me again two days before the inauguration, again seemingly to check in and shoot the breeze and then he called me a third time when he — after he became President and I refused to return the call.

STEPHANOPOULOS: That you didn’t take because he was President. But on those other phone calls James Comey talked about the President trying to develop what he called a patronage relationship. Is that what you think was happening with you?

BHARARA: That’s not the word I use. I was in discussions with my own folks, and in reporting the phone call to the chief of staff to the attorney general I said, it appeared to be that he was trying to cultivate some kind of relationship.

Wall Street has been highly successful in cultivating a “relationship” with law enforcement. Perhaps that’s where President Trump got the idea he could do the same.

Donald Trump’s New Lawyer Tied to a Shadowy Web of Nonprofits

By Pam Martens and Russ Martens: June 22, 2017 

Trump's New Lawyer, Jay Sekulow, Appears on Fox News Sunday with Chris Wallace

Trump’s New Lawyer, Jay Sekulow (Right), Appears on Fox News Sunday with Chris Wallace

Four years ago Wall Street On Parade published an investigative report with the headline: “Jay Sekulow: The Man Pumping the IRS Scandal on Network TV Sits at the Center of a Web of Nonprofits That Have Paid Him, His Family and Related Businesses $40 Million Since 1998.” Add millions of dollars more to the above figure and you have an updated account of the man the President of the United States just added to his white collar criminal defense legal team. Oh yes, there’s one more update, Jay Sekulow has no white collar criminal defense legal experience.

Sekulow also appears to be the new spokesperson for Trump’s legal team.  His tenure in that position may be short-lived given his recent roasting by comedian Stephen Colbert. (See video clip below.) This past Sunday, June 18, Sekulow made the rounds of the Sunday talk shows, which included getting into a heated argument with Chris Wallace on Fox News Sunday on whether Sekulow had just flip-flopped on whether Trump is under investigation by the Justice Department’s Special Counsel, Robert Mueller.

Colbert had this take on Sekulow’s performance on Fox News:

“Sekulow is saying Trump is not under investigation, is under investigation, and he has no idea if he’s under investigation. A good lawyer covers his bases. That way, when the judge asks ‘How does your client plead, guilty or innocent,’ he could answer, ‘All of the above.’ ”

One sentence during Sekulow’s appearance on Fox News Sunday might provide some insight into where this lawyer plans to go with the Trump case. At one point Sekulow told Wallace: “I just gave you the legal theory, Chris, of how the constitution works….” A great deal of Sekulow’s past has been advancing right-wing cases to the U.S. Supreme Court.

Back in 2013, Sekulow was making the rounds of the news talk shows to hype the story that Obama’s IRS was unfairly targeting right-wing nonprofits. We wrote at the time:

“Jay Sekulow will never be accused of a lack of audacity. The man who has orchestrated and pumped the ‘scandal’ that the IRS was unfairly targeting nonprofits tied to the Tea Party, is the same man who filed 27 applications with the IRS in recent years seeking tax-exempt status for Tea Party and related groups. He’s also the man who together with family and business interests have reaped at least $40 million since 1998 from a tangled web of IRS approved nonprofits with eye-popping conflicts of interest.

“In the early days of the IRS controversy, Jay Sekulow was a major source of information for network news. On May 13, he framed the controversy for CBS News and the PBS Newshour. Two days later he appeared on GBTV with Glenn Beck, framing the current IRS matter as ‘worse’ than in the days of Nixon. He also appeared on the Larry Kudlow show on CNBC, which ran a headline across the screen ‘Time for Independent Counsel.’ ”

Sekulow hyped the IRS story all the way to the front pages of newspapers by doing interviews with Fox News hosts Megyn Kelly, Sean Hannity, Eric Bolling and Jeanine Pirro. Sekulow’s son, Jordon Sekulow, also appeared on Geraldo Rivera’s show on Fox News.

As part of our report in 2013, we provided this partial listing of nonprofits and businesses with money flows tied to Sekulow: Advocacy Services, Inc., Educational Resources, American Center for Law and Justice, ACLJ-DC, ACLJ-Midwest, ACLJ-Northeast (The Religious Liberty Project), Center for Law and Justice, Christian Advocates Serving Evangelism, Constitutional Litigation and Advocacy Group, European Center for Law and Justice, Law and Justice Institute, Regency Productions, and the Slavic Center for Law and Justice.

In yet another investigative report published by Wall Street On Parade in 2013, we found money ties between Sekulow and the former U.S. Attorney General, John Ashcroft. We wrote at the time:

“In 2005, the same year that Ashcroft stepped down from the Department of Justice and accepted a faculty position at Regent, a nonprofit was formed by Sekulow called the Law and Justice Institute. Under its program description the following year, it stated: ‘Contract to provide the services of distinguished individuals to participate in educational activities related to the organizations exempt purposes: Regent University School of Law – Distinguished Professor of Law and Government.’ That title is the one carried by John Ashcroft.

“From 2006 through the most recently available tax return for 2011, the Law and Justice Institute has paid a total of $2,381,667 to a business called Educational Resources Associates, LLC listed at a residential address in Washington, D.C. Public records show the property was formerly owned by a John and Janet Ashcroft, the name of the former U.S. Attorney General and his wife. Despite the Ashcrofts selling the home in 2005, the tax returns for the Law and Justice Institute through 2011 still carry the same address for Educational Resources Associates, LLC.

“I called the current owner of the residence and was assured that no business is being run out of that address. So why aren’t the checks being returned by the post office? Are they being hand delivered to the principal owner of Educational Resources Associates, LLC?

“A phone call to the accountant for the Institute and multiple emails yielded no further information. (I will update this article if and when that information is forthcoming.)

“In the last two years, Educational Resources Associates has taken a big pay cut from $450,000 annually to under $300,000; but an additional business has been added as a recipient of funds from the Law and Justice Institute – Advocacy Services, Inc. with an address of 977 Centerville Turnpike, Virginia Beach, Virginia. That’s the address for Pat Robertson’s Christian Broadcasting Network. Tax returns for 2010 and 2011 show a total of $1 million being paid to the business. Jay Sekulow continues to be listed on the tax returns as the ‘principal officer’ of the Law and Justice Institute.

“The Law and Justice Institute is a nonprofit organization receiving a taxpayer subsidy. John Ashcroft was the former highest ranking law enforcement agent in the U.S. The public has a right to transparency with this organization, its reason for existing and the gritty details of its money flows.

“As for the IRS and the Tea Party, a pivotal question that corporate media has failed to ask, is why, if all these Tea Party-type groups are genuinely independent, spontaneous grassroots uprisings, did 27 of them all end up being handled by one man – Jay Sekulow.”

American citizens have been waiting far too long for an in-depth, independent investigation of how money has totally corrupted Washington.

Report: Measured for Social Progress, U.S. Is a Second-Tier Nation

Top Countries for Social Progress (Source: Social Progress Index Released June 21, 2017)

Top Countries for Social Progress (Source: Social Progress Index Released June 21, 2017)

By Pam Martens and Russ Martens: June 21, 2017

You can tell a lot about a nation by the kind of research reports it spews out monthly or quarterly. In the United States, we are bombarded with Federal government reports on Gross Domestic Product (GDP), Durable Goods Orders, Retail Sales, Housing Starts and the like. If you want to know the price of gold or oil or thousands of corporate stock prices, you can get those numbers on a second by second basis on your laptop or mobile app.

Research releases in the United States that measure how the nation is doing in the area of social progress are far fewer and less timely. You’re not going to find such data released monthly or even quarterly. Take, for example, Federal studies that measure homelessness among students in public schools. The most recent research we could find from the U.S. Department of Education measured the data for the 2014-2015 school year. Clearly, it’s not something a rich nation wants to brag about. The report found that pre-K through 12th grade students in the U.S. who had experienced homelessness in the 2014-2015 school year totaled 1,263,323 – double the amount from a decade ago and a stunning 34 percent increase since the economic recovery began in the summer of 2009.

This morning the annual Social Progress Index and report were released, measuring 128 countries based on Basic Human Needs, Foundations of Wellbeing, and Opportunity. The United States ranked 18 and was placed in a “second tier” status. The report noted: “Traditional measures of national income, such as GDP per capita, fail to capture the overall progress of societies.”

On the component measuring health and wellness, the report found that the U.S. “performs far below countries at the same level of GDP per capita, registering relative weaknesses on all indicators in the component.” On the component measuring tolerance and inclusion, the researchers found that the U.S. “ranks just 23 in the world across this component, placing it behind less prosperous countries including Argentina, Chile, Uruguay, and Costa Rica.”

Denmark ranked number one in the overall Index with four other Nordic countries making it into the top tier. Canada also made it into the top tier and was the best performing G7 country. (See graph above.)

The study defines social progress as follows:

“Social progress is the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.”

The troubling findings in the report reminded us of warnings made by Senator Bernie Sanders throughout his campaign for President and in an opinion piece he penned for the Washington Post on January 9 of this year. Sanders wrote:

“How do we stop the movement toward oligarchy in our country in which the economic and political life of the United States is increasingly controlled by a handful of billionaires?

“Are we content with the grotesque level of income and wealth inequality that we are experiencing? Should the top one-tenth of 1 percent own almost as much wealth as the bottom 90 percent? Should one family in this country, the Waltons of the Walmart retail chain, own as much as the bottom 40 percent of our people? Should 52 percent of all new income be going into the pockets of the top 1 percent?

“While the very rich become much richer, are we satisfied with having the highest rate of childhood poverty of almost any major country on earth? Can a worker really survive on the current federal minimum wage of $7.25 an hour? How can a working-class family afford $15,000 a year for childcare? How can a senior citizen or a disabled veteran get by on $13,000 a year from Social Security?

“What can be done about a political system in which the very rich are able to spend unlimited sums of money to elect candidates who represent their interests? Is that really what democracy is about?…

“Why is the richest country in the history of the world the only major country not to provide health care to all as a right, despite spending much more per capita? Why are we one of the very few countries on earth not to provide paid family and medical leave? With the five major drug companies making over $50 billion in profits last year, why do we end up paying, by far, the highest prices in the world for prescription drugs?

“How do we succeed in a competitive global economy if we do not have the best educated workforce in the world? And how can we have that quality workforce if so many of our young people are unable to afford higher education or leave school deeply in debt? Not so many years ago, we had the highest percentage of college graduates in the world. Now we don’t even rank in the top ten. What can we do to make sure that every American, regardless of income, gets all of the education he or she needs?”

The research findings from the Social Progress Index are yet another embarrassing black eye to the standing of America on the world stage — as billionaires move to consolidate their power in Washington.