Puerto Rico – Here’s Why the New York Fed Does Not Feel Your Pain

By Pam Martens and Russ Martens: February 24, 2018

William C. (Bill) Dudley, President of the Federal Reserve Bank of New York

William C. Dudley, President of the Federal Reserve Bank of New York

On Thursday, the President of the Federal Reserve Bank of New York, William C. Dudley, held a press conference to effectively tell Puerto Ricans to suck it up as they attempt to recover from an epic humanitarian crisis caused by Hurricane Maria, which devastated infrastructure and wiped out electricity to the entire Island in September.

When it comes to corrupt Wall Street banks that are in the process of failing, the Federal Reserve can always find trillions of dollars to funnel into the banks’ coffers at almost zero interest rates to prop them back up. It does that through its power to electronically create money out of thin air. Take, for example, the $16 trillion it secretly lavished on Wall Street banks and their foreign counterparts during the financial crash of 2007 to 2010.

For deviant banks and their shareholders, the Federal Reserve has a big heart, great sympathy and big purse strings. When it comes to the human suffering of Americans, it consistently turns its back.

Consider how Dudley’s predecessor at the New York Fed, Tim Geithner, handled the housing crisis created by Wall Street banks. According to Neil Barofsky, the Special Inspector General of the Troubled Asset Relief Program, in his book Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street, this is what happened: the Fed created HAMP, ostensibly a program to provide housing relief to humans but it was secretly a delay mechanism to help the banks. Barofsky wrote in his book:

“For a good chunk of our allotted meeting time, Elizabeth Warren grilled Geithner about HAMP, barraging him with questions about how the program was going to start helping home owners. In defense of the program, Geithner finally blurted out, ‘We estimate that they can handle ten million foreclosures, over time,’ referring to the banks. ‘This program will help foam the runway for them.’

“A lightbulb went on for me.  Elizabeth had been challenging Geithner on how the program was going to help home owners, and he had responded by citing how it would help the banks. Geithner apparently looked at HAMP as an aid to the banks, keeping the full flush of foreclosures from hitting the financial system all at the same time. Though they could handle up to ‘10 million foreclosures’ over time, any more than that, or if the foreclosures were too concentrated, and the losses that the banks might suffer on their first and second mortgages could push them into insolvency, requiring yet another round of TARP bailouts. So HAMP would ‘foam the runway’ by stretching out the foreclosures, giving the banks more time to absorb losses while the other parts of the bailouts juiced bank profits that could then fill the capital holes created by housing losses.”

Dudley was speaking about Puerto Rico on Thursday because it is part of the Federal Reserve’s Second District covered by the New York Fed. That includes New York State, the 12 northern counties of New Jersey, Fairfield County in Connecticut, the U.S. Virgin Islands and Puerto Rico. Dudley offered this:

“Puerto Rico now must not only complete the recovery from the hurricane, but also do what is necessary to get on a sustainable economic and fiscal path.  Given the Island’s high debt, unfunded pension obligations, declining population, and now the hurricane, the outlook may seem grim…”

But instead of the cold hard cash the corrupt banks got funneled to them to bail them out, Dudley promised devastated Puerto Ricans only advice:

“The New York Fed will continue to help in the best ways we can—by providing independent research and analysis, and by leveraging our convening authority to bring together stakeholders to share expertise, explore opportunities, and provide information to those who need it most.”

It’s tough for Dudley to feel the pain of Americans who lost their homes through fraudulent foreclosures by the banks he oversees or families rendered homeless in Puerto Rico from an epic hurricane. According to statistics in the 2016 annual report from the Federal Reserve (see Table 13), Dudley’s annual salary at that time was $469,500. And, as we previously reported in 2012, Dudley’s wife, Ann Darby, was set to receive $190,000 per year until 2021 in deferred compensation from JPMorgan Chase, a bank regulated by Dudley whose CEO, Jamie Dimon, was simultaneously sitting on the Board of Directors of the New York Fed.

The day before Dudley held his press conference on Puerto Rico this past week, Kate Aronoff was explaining to readers at The Intercept how Citigroup, another serially charged Wall Street bank overseen by the New York Fed, had profited by burying Puerto Rico under debt and would now be overseeing the privatization of its public electric utility. Aronoff wrote:

“The bank has profited elsewhere on the island, as well. Citi was among the underwriters of eight capital appreciation bonds, or CABs, and the lead underwriter on five of those. The principal on all eight CABs totaled $2.7 billion, though interest on them — charged at a whopping rate of 718 percent — came to $22.8 billion. The bank was also the second-largest underwriter in Puerto Rico of so-called scoop and toss financing deals, which — while allowing bond issuers to push payments off into the future — also means heaping additional fees and interest onto preexisting principal and interest payments. From 2000 to 2016, the bank collected $302 million in fees off underwriting $11.3 billion in scoop and toss arrangements, the second largest of any collection off these type of deals.”

The Fed’s generosity to Citigroup, which has been serially charged by regulators for abusing the public and became a felony bank in 2015, stands in stark contrast to the crumbs of advice offered to Puerto Rico. During the financial crisis which Citigroup played a major role in creating, the U.S. Treasury provided $45 billion in capital to Citigroup; the government guaranteed over $300 billion of Citigroup’s assets; the Federal Deposit Insurance Corporation (FDIC) guaranteed $5.75 billion of its senior unsecured debt and $26 billion of its commercial paper and interbank deposits; and the Federal Reserve secretly sluiced $2.5 trillion in almost zero-interest, cumulative loans to Citigroup from the end of 2007 through at least mid 2010.

According to a poll released late last year, a majority of Americans believe this is the lowest point in our nation’s history. But will this be enough to create the political revolution that Senator Bernie Sanders had hoped for in 2016.

An Open Message to Parkland Students: Don’t Underestimate the Enemy

By Pam Martens and Russ Martens: February 22, 2018 

Robert Schentrup Asking a Question at CNN Town Hall,  February 21, 2018

Robert Schentrup Asking a Question at CNN Town Hall, February 21, 2018

Carmen Schentrup would have celebrated her 17th birthday yesterday had she not been gunned down in a hail of bullets from an AR-15 semi-automatic assault weapon on February 14 at the Marjory Stoneman Douglas High School in Parkland, Florida by an expelled student who had bought the gun legally when he was just 18 years old. Last evening her brother, Robert, appeared at a CNN Town Hall that was convened to discuss the shooting. He posed the following question to Congressman Ted Deutch who was present at the Town Hall:

“If a majority of Americans have long supported stricter gun control regulations, but our elected officials who are supposed to represent the people have done nothing, does this mean that our democracy is broken?”

Congressman Deutch, a Democrat who does support strong gun laws, told the anguished young man that our democracy is “a little broken.”

But our democracy is not a little bit broken. Our democracy is a wistful relic of a bygone era when corporations and Super Pacs and billionaires could not outspend the average American in elections by staggering amounts of money. For example, according to the Center for Responsive Politics, the hedge fund, Renaissance Technologies, gave $16.5 million to support the Hillary Clinton presidential campaign in 2016 while it was also the number one contributor to the Donald Trump campaign with $15.5 million. No matter who wins the Oval Office, the American people lose.

The same is true in Congress. If the NRA doesn’t own your elected voice, Wall Street does; or Big Oil does; or Big Pharma does.

Despite the wide publicity of the San Bernardino, California shooting on December 2, 2015 where 14 people were killed and 22 injured, the very next day the U.S. Senate rejected a bill to tighten background checks on those attempting to buy a gun. Not long after 20 young children and 6 adults were gunned down by a lone assailant at Sandy Hook Elementary School in Newtown, Connecticut the U.S. Senate also rejected tighter background check legislation.

The Parkland, Florida shooting left 14 students and 3 adults dead. It marks the 30th mass shooting in just the first 45 days of 2018. And yet Congress allows the AR-15 and other assault weapons to be sold to civilians in the United States – in many states to teenagers as young as 18.

Yes, there are still a small number of moral members of Congress who continue to work for and fight for the American people. But even they have been sold out by the corrupted two-party system that will not allow an uncompromised voice to become President or rise to a position of power in Congress. Nothing better underscores this than how Senator Bernie Sanders was deviously undermined in his presidential primary efforts by the Democratic National Committee.

The unrelenting mass shooting of our nation’s children is the most tragic and emotionally devastating example of a perverted and grotesque campaign financing system where only corporate interests or those of the billionaires have a voice in our government. But the next generation is not only going to suffer from the lifelong effects of Post Traumatic Stress Disorder from mass shootings in what were once considered safe spaces in our country, but their environment is also being destroyed by the climate change deniers in Congress who are funded by Big Oil.

And look at what happened after the worst economic collapse in the United States since the Great Depression. Not one executive of any major Wall Street firm that caused the financial crash in 2008 through fraudulent activities was prosecuted by the U.S. Justice Department — which was headed at the time by law partners from Covington & Burling – the Big Tobacco law firm that was singled out in a Federal Court decision for hiding the deadly effects of cigarette smoke for decades. How did those Covington & Burling lawyers get those jobs? They got those jobs because President Obama outsourced the staffing of his administration to an executive of Citigroup, Michael Froman, while the bank was both insolvent and receiving the largest taxpayer bailout in U.S. history as a result of its corrupt behavior.

The financial crash has also left a deep and tragic emotional toll on Americans. It cost 8.7 million Americans their jobs; 10 million families lost their homes, many through illegal foreclosures; and it wiped out almost half of the wealth of middle class families compared to 2001. And just look at who has grotesquely benefited from that. President Obama named Jack Lew, a former executive from the very division of Citigroup that had tanked the firm, to be his Treasury Secretary. President Trump named Steve Mnuchin, a foreclosure king, to be his Treasury Secretary. Both Presidents named lawyers who had extensive ties to representing Wall Street to head its top cop, the Securities and Exchange Commission. Despite both Democrat and Republican Party platforms in 2016 that called for reinstating the Glass-Steagall Act, that would remove taxpayer-backstopped insured depository banks from the gambling casinos on Wall Street, Congress hasn’t even gotten close to passing that legislation.

The Herculean efforts and voices of the Parkland students, their devoted parents and teachers will be an exercise in futility unless they simultaneously address the malignant disease that has devoured our democracy. The shootings, like the collapse of our financial system in 2008 and the ongoing devastation to our environment, are just symptoms. The malignant disease is how political campaigns are financed in America.

Is that Cartel of Wall Street Lawyers Fixing Bank CEO Pay?

By Pam Martens and Russ Martens: February 21, 2018

Logos of Wall Street BanksNothing buttresses Senator Bernie Sanders’ position that fraud on Wall Street is not a bug but a feature better than the news last week that the Citigroup Board was bumping up CEO Michael Corbat’s pay by 48 percent to $23 million for 2017. Corbat has sat at the helm of the bank since October 2012 as the bank has paid more than $12 billion in fines and restitution for serial abuses of the public and investors, including its first criminal felony count in more than a century of existence. The felony count came on May 20, 2015 from the U.S. Department of Justice over the bank’s involvement in a bank cartel that was rigging foreign currency markets. Numerous other charges against the bank have focused on money-laundering. Citigroup’s long history of involvement in money-laundering also gives the appearance of being a feature not a bug. (See a timeline of the charges against Citigroup under Corbat’s tenure at the end of this article.)

Aside from the feeling that overseeing a business model of fraud on Wall Street is a road to riches for Wall Street’s mega bank CEOs, there is the disquieting question as to whether this strangely uniform obscene pay of the top dogs on Wall Street is being orchestrated by another invisible cartel.

On October 14, 2016 Bloomberg News’ reporters Greg Farrell and Keri Geiger landed the bombshell report that the top lawyers of the biggest Wall Street banks had been meeting secretly for two decades with their counterparts at international banks. At the 2016 secret meeting, held in May at a posh hotel in Versailles, the following were among the big bank lawyers: Gregory Palm, part of the Management Committee at Goldman Sachs; Stephen Cutler of JPMorgan (a former Director of Enforcement at the SEC); Gary Lynch of Bank of America (also a former Director of Enforcement at the SEC); Morgan Stanley’s Eric Grossman; Citigroup’s Rohan Weerasinghe; Markus Diethelm of UBS Group AG; Richard Walker of Deutsche Bank (again, a former Director of Enforcement at the SEC); Robert Hoyt of Barclays; Romeo Cerutti of Credit Suisse Group AG; David Fein of Standard Chartered; Stuart Levey of HSBC Holdings; and Georges Dirani of BNP Paribas SA.

Reuters reported last Friday how Corbat’s $23 million pay compared to his peers on Wall Street. It noted that Jamie Dimon, CEO of JPMorgan Chase is now making $29.5 million. (Dimon has presided over three criminal felony counts at the bank within the past four years while keeping his job and watching his pay skyrocket.) Morgan Stanley CEO James Gorman is making $27 million. Lloyd Blankfein, whose bank is tiny compared to JPMorgan Chase, is making $22 million. And Bank of America’s CEO Brian Moynihan is being paid the same as Corbat, $23 million after recently getting a 15 percent pay boost.

Every one of the top lawyers of these banks were at that secret confab in 2016.

The most recent proxy filed by JPMorgan Chase goes to inordinate lengths to justify what it is paying its CEO Jamie Dimon. It includes a graph comparing his pay to peer bank CEOs and another graph that shows what percent of profits he and the CEOs of peer banks are receiving. (How that became a relevant metric is anyone’s guess. These are not, after all, family-owned businesses but banks that are subsidized by a taxpayer backstop for their trillions in insured deposits which typically earn less than one percent interest as the banks simultaneously charge 10 to 20 percent interest on their credit cards issued to the struggling middle class of America.)

A better metric would be how much shareholders have lost from fines and settlements under the reigning CEO. In Jamie Dimon’s case, it’s north of $36 billion since the financial crisis in 2008. Additionally, there’s those three criminal felony counts, the first in the bank’s more than century-old existence. Two felony counts were leveled by the U.S. Justice Department in 2014 for the bank’s role in Bernie Madoff’s Ponzi scheme. Another felony count came the very next year for the bank’s role in the foreign exchange rigging.

The era of obscene pay on Wall Street has occurred side-by-side with the era of serial charges of crimes. There is only one way to interpret this: the Boards of Directors of these banks have lost their moral compass.

————-

A sampling of charges against Citigroup since Michael Corbat became CEO:

July 1, 2013: Citigroup agrees to pay Fannie Mae $968 million for selling it defective mortgage loans.

September 25, 2013: Citigroup agrees to pay Freddie Mac $395 million to settle claims it sold it toxic mortgages.

December 4, 2013: Citigroup admits to participating in the Yen Libor financial derivatives cartel to the European Commission and accepts a fine of $95 million.

July 14, 2014: The U.S. Department of Justice announces a $7 billion settlement with Citigroup for selling toxic mortgages to investors. Attorney General Eric Holder called the bank’s conduct “egregious,” adding, “As a result of their assurances that toxic financial products were sound, Citigroup was able to expand its market share and increase profits.”

November 2014: Citigroup pays more than $1 billion to settle civil allegations with regulators that it manipulated foreign currency markets. Other global banks settled at the same time.

May 20, 2015: Citicorp, a unit of Citigroup becomes an admitted felon by pleading guilty to a felony charge in the matter of rigging foreign currency trading, paying a fine of $925 million to the Justice Department and $342 million to the Federal Reserve for a total of $1.267 billion. The prior November it paid U.S. and U.K. regulators an additional $1.02 billion.

May 25, 2016: Citigroup agrees to pay $425 million to resolve claims brought by the Commodity Futures Trading Commission that it had rigged interest-rate benchmarks, including ISDAfix, from 2007 to 2012.

July 12, 2016: The Securities and Exchange Commission fined Citigroup Global Markets Inc. $7 million for failure to provide accurate trading records over a period of 15 years. According to the SEC: “CGMI failed to produce records for 26,810 securities transactions comprising over 291 million shares of stock and options in response to 2,382 EBS requests made by Commission staff, between May 1999 and April 2014, due to an error in the computer code for CGMI’s EBS response software. Despite discovering the error in late April 2014, CGMI did not report the issue to Commission staff or take steps to produce the omitted data until nine months later on January 27, 2015. CGMI’s failure to discover the coding error and to produce the missing data for many years potentially impacted numerous Commission investigations.”

January 23, 2017: The Consumer Financial Protection Bureau (CFPB) fined Citigroup $28.8 million for “giving the runaround to borrowers trying to save their homes.”

May 22, 2017: Citigroup signed a deferred prosecution agreement with the U.S. Department of Justice and paid a $97 million fine over charges that its Banamex unit committed “criminal violations by willfully failing to maintain an effective anti-money laundering” program.

November 21, 2017: The Consumer Financial Protection Bureau (CFPB) imposed a $2.75 million fine against Citibank for a litany of abuses against student loan borrowers. The CFPB also ordered Citi to pay $3.75 million in restitution.

December 28, 2017: Citigroup paid $11.5 million to settle FINRA charges its brokerage unit harmed retail customers by displaying the wrong research ratings from its analysts for hundreds of stocks for nearly five years. For example, customers might have been seeing a “buy” rating when the actual rating from the analyst was “sell.”

January 4, 2018: Office of the Comptroller of the Currency fines Citigroup $70 million for failures in its anti-money laundering policies.

Alarm Bells Sounded on Wall Street’s Derivatives

By Pam Martens and Russ Martens: February 20, 2018

Andy Green, Managing Director, Economic Policy , Center for American Progress

Andy Green, Managing Director,  Economic Policy Center for  American Progress

On February 14, the week after the Dow Jones Industrial Average experienced two separate days of more than 1,000-point losses, the House Financial Services’ Subcommittee on Capital Markets, Securities and Investment convened a hearing to discuss various legislative proposals to return to the wild west era of derivatives trading on Wall Street. (Many, including Wall Street On Parade, believe that we’ve never left that era – the risks have simply been hidden behind a dark curtain. See related articles below.)

One lonely voice for sanity on the witness panel, which was stacked with industry trade groups, was Andy Green, Managing Director at the Economic Policy Center for American Progress. Green’s written testimony stated that the legislative proposals “slice, dice, or otherwise poke holes – sometimes large holes – in the firewalls placed in the derivatives markets by post 2008 reforms….”

Green also reminded the Congressional members present that the “unregulated OTC derivatives market was at the heart of the 2007-2008 financial crisis, which cost 8.7 million Americans their jobs, 10 million families their homes, and eliminated 49 percent of the average middle-class family’s wealth compared with 2001 levels.”

Green provided a litany of the derivative horrors that led to panic and financial contagion during the financial crisis. The collapse of the giant insurer AIG from credit default swap derivatives and its role as counterparty to some of Wall Street’s largest banks. (In response to the AIG collapse, the U.S. government bailed out the company to the tune of $185 billion. Half of the bailout money effectively went in the front door of AIG and then out the backdoor to the big Wall Street banks and hedge funds that had used AIG as their counterparty to guarantee their bets on Credit Default Swaps.)

Also noted by Green was Lehman Brothers’ “disorderly failure” which “was exacerbated due to the company’s extensive OTC derivatives portfolio.” Green reminded attendees that Lehman “had around 930,000 OTC derivatives contracts at the time of its failure.”

Green then delved back a little further in time: there was the blow-up of the hedge fund Long Term Capital Management in 1998. The firm had $4 billion of net assets but had “used OTC derivatives to increase its total leverage exposure to $1 trillion.” That required the New York Fed to strong arm major Wall Street banks, who were counterparties to the derivatives, to bail it out.

Then, of course, there was Enron, which in 2001 filed the largest bankruptcy in U.S. history up to that time. Green says Enron’s “unregulated energy derivatives were at the center of Enron’s collapse” and it “used OTC derivatives to hide debt, to hide losses, and to speculate.”

What Green mentions only tangentially in his written testimony is that four years after Wall Street had exploded itself with wild derivative gambles, and two years after the Dodd-Frank financial reform legislation was passed in 2010, Wall Street’s largest bank was still unrepentant. In 2012 JPMorgan Chase was caught gambling in exotic derivatives in London in a scandal that became known as the “London Whale.” The bank eventually had to own up to using its bank depositors’ money for hundreds of billions of dollars in derivatives trades while losing a stunning $6.2 billion in the process.

In 2015, the U.S. Treasury’s Office of Financial Research released a report written by Jill Cetina, John McDonough, and Sriram Rajan, which revealed that JPMorgan’s London Whale trades were actually a capital relief trade – an effort to gin up its capital through derivatives. The report stated:

“JPMorgan Chase & Co.’s losses in the 2012 London Whale case were the result of CDS [Credit Default Swap] usage which was undertaken to obtain regulatory capital relief on positions in the trading book.”

Green sums up his pitch against further deregulation of derivatives as follows:

“Financial markets have a strong frequent tendency towards rent-seeking behavior which comes at the expense of the real economy. Regulatory standards are required to ensure transparency and competition that will benefit those in the real economy that would utilize those markets, irrespective of financial stability purposes. Small and mid-sized businesses, family farmers, and others in the real economy are far better served by a simple, robustly regulated market where prices are transparent and competition is meaningful.”

“Rent-seeking behavior” is a more polite phrasing of what Senator Bernie Sanders says is a Wall Street business model of fraud.

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

Two of the Biggest Bailed Out Derivative Banks, Citi and Merrill, Get Fined for Breaking Derivatives Rules

Shhh! Don’t Tell this Bank Regulator We’ve Got a Derivatives Problem

The Contagion Deutsche Bank Is Spreading Is All About Derivatives

U.S. Government Is Now a Major Counterparty to Wall Street Derivatives

Who is Morgan Stanley and Why Its $31 Trillion in Derivatives Should Concern You

Financial System of U.S. Rests on Health of Just Five Mega Banks

Wall Street’s Regulators Move Deeper Into Darkness Under Trump

By Pam Martens and Russ Martens: February 16, 2018

Jay Clayton, Law Partner at Sullivan & Cromwell, Has Been Nominated to Chair the SEC by Trump

Jay Clayton, Chair of the SEC

In towns across America there are laws that prevent government officials from meeting secretly. Typically, the officials must first publish a notice to the public with the date and time of the meeting; circulate the notice in a widely read publication and post the notice on the official website in order to give the public advance notice and the ability to attend the meeting or hearing.

The ability of the U.S. public to attend government meetings; hear firsthand what is being done with taxpayers’ dollars; ask questions about any perceived conflicts that might exist; and file Sunshine law requests for documents is how citizens hold government officials accountable.

When we lose that, we lose the entire concept of America as a country of the people, by the people and for the people. Thus, any effort at all to whittle away at open government laws must be viewed as a dangerous encroachment on democracy.

Tragically, the mainstream media and much of America were so enamored with President Obama’s statesmanship and his status as the first black to sit in the highest office of the United States, that he was able to preach transparency while delivering darkness to a vast part of his government. Under President Donald Trump, the dark curtain has enveloped more and more parts of the Federal government with new details coming out just this week. We’ll get to those details in a moment, but first some necessary background to show that Wall Street Democrats have failed the American people as well as Republicans.

President Obama took office on January 21, 2009. On that very day, he issued an Open Government memo that promised the American people a new era of transparency. On March 19, 2009, under the President’s orders, the Attorney General’s office issued detailed guidelines on how Federal agencies were to respond going forward to Freedom of Information Act (FOIA) requests.  Federal agencies were instructed as follows:

“The key frame of reference for this new mind set is the purpose behind the FOIA. The statute is designed to open agency activity to the light of day. As the Supreme Court has declared: ‘FOIA is often explained as a means for citizens to know what their Government is up to.’ NARA v. Favish, 541 U.S. 157, 171 (2004) (quoting U.S. Department of Justice v. Reporters Comm. for Freedom of the Press, 489 U.S. 749, 773 (1989)…The President’s FOIA Memoranda directly links transparency with accountability which, in turn, is a requirement of a democracy. The President recognized the FOIA as ‘the most prominent expression of a profound national commitment to ensuring open Government.’  Agency personnel, therefore, should keep the purpose of the FOIA — ensuring an open Government — foremost in their mind.”

It was a grand exercise in illusion. For the next eight years, Wall Street On Parade and hundreds of other reporters and nonprofits were denied access to documents and materials that would have allowed us to hold our government accountable.

The most dramatic example of this was the fact that the Federal Reserve Board of Governors, designated an independent Federal agency and subject to FOIA laws, refused for years to respond to media requests for the details of loans it had made to Wall Street firms during the financial crisis. The Fed fought the media in court for years to keep this information secret. Only when it finally lost its court case and Senator Bernie Sanders attached an amendment to the Dodd-Frank financial reform legislation requiring a Government Accountability Office (GAO) Audit of the Fed, did the public learn that the Fed had become a secret government unto itself.

Without the knowledge or approval of Congress, the Federal Reserve had made $16.1 trillion cumulatively in almost zero interest rate loans from 2007 to mid 2010 to bail out the big Wall Street banks and their foreign counterparts. Almost half of that amount, $7.8 trillion, went to just four Wall Street mega banks: $2.5 trillion to Citigroup; $2 trillion to Morgan Stanley; $1.9 trillion to Merrill Lynch; and $1.3 trillion to Bank of America. (See the chart below from the 2011 GAO report for the full list of bailed out banks.)

Mark Pittman of Bloomberg News was one of the reporters who fought the Fed for this information. He died in the midst of this battle at age 52 on November 25, 2009. A year after Pittman’s death, his editor at Bloomberg News, Bob Ivry, wrote about the contemptuous treatment Pittman had received at the hands of the U.S. Treasury. Ivry wrote:

“More than 20 months later, after saying at least five times that a response was imminent, Treasury officials responded with 560 pages of printed-out e-mails — none of which Pittman requested. They were so heavily redacted that most of what’s left are everyday messages such as ‘Did you just try to call me?’ and ‘Monday will be a busy day!’

“Treasury also cited the trade-secrets exemption in responding to a separate, similar FOIA request by Bloomberg News for details about Citigroup’s segregated bad assets. In that response, 73 of 104 pages were completely blacked out except for headings. Only six pages — the cover, contents, a boilerplate list of legal disclosures and a paragraph titled ‘FOIA Request for Confidential Treatment’ — were free of redactions.”

The same year that the GAO released its Fed study on the trillions of dollars loaned to Wall Street, the Occupy Wall Street movement was born with the slogan: “Banks got bailed out, we got sold out.” Details would not come out for years attesting to just how accurate that characterization was. In January 2017 the public learned from another GAO study that the struggling citizens of America had received paltry billions in help during the financial crisis while the corrupt banks that had caused the crisis received trillions. The GAO study showed that as of October 31, 2016 only $22.6 billion had been disbursed to help distressed homeowners.

In 2016 the GAO released a report showing that during the Obama administration lawsuits by persons who were unable to obtain Federal records that they believed belonged in the public domain grew dramatically. In 2008, the last year of Bush’s presidency, 321 Freedom of Information Act (FOIA) lawsuits were filed. By 2014, that number had spiked to 434 lawsuits and registered 456 in 2015, an increase of 42 percent over 2008.

Wall Street On Parade made dozens of requests under FOIA while President Obama was President. We were stonewalled at every turn. We asked the Federal Reserve Bank of New York simply for a photograph of its trading floor. They refused to give us one. We had to spend endless days in order to find them elsewhere. In 2014 we asked the Securities and Exchange Commission (SEC) about how specific Dark Pools operate on Wall Street. They refused our request. In 2010 we asked the SEC to provide us with the names of two Wall Street firms who it had publicly admitted had played a pivotal role in the Flash Crash of May 6, 2010. It denied our request. In 2014 the Office of the Comptroller of the Currency (OCC), the Federal regulator of national banks, denied our FOIA appeal for documents related to JPMorgan Chase carrying life insurance on tens of thousands of its workers with the corporation named as the beneficiary. (See OCC Response to Appeal from Wall Street On Parade Re JPMorgan Banker Death Bets.)

Senator Elizabeth Warren, acting as a watchdog for the public, has consistently been denied access to Wall Street documents. On April 11, 2013, Senator Warren indicated at a Senate hearing that she had been stymied in her attempts to gather documents from the Federal Reserve and Office of the Comptroller of the Currency (OCC) to carry out the Senate’s oversight function. Warren stated:

“Over the last few months, Congressman Elijah Cummings and I have requested documents from your agencies regarding the basic data and the processes of the Independent Foreclosure Review. We made 14 specific requests to you in January, and despite multiple letters back and forth and multiple meetings, you have provided only one full response, three partial or minimal responses, and no response to nine of our requests. You have provided little specific information on what the review actually found, such as the number of improper foreclosures, the amount and number of inflated fees, or the extent of abusive practices by each of the mortgage servicers.”

All of the above occurred under the Obama administration. It’s getting worse under President Trump. Yesterday Bloomberg News reported that the SEC is now settling cases against banks and hedge funds without issuing press releases as it has historically done, ostensibly to save the firms embarrassment and deny the public the ability to see that wrongdoing continues unabated on Wall Street despite the huge fines following the financial crash. Last month, Susan Antilla and Gary Rivlin wrote an in-depth report for The Intercept showing how Trump’s SEC is allowing more secrecy in what Wall Street itself has to report to the public.

Now the U.S. Treasury, headed by the former foreclosure king, Steve Mnuchin, has announced it plans to hold a secret meeting of the Financial Stability Oversight Council (F-SOC) next Wednesday, February 21. F-SOC was created under the Dodd-Frank financial reform legislation of 2010 to make sure the financial collapse of 2008 would never happen again. That collapse was the worst economic event for the United States since the Great Depression of the 1930s. Given the financial devastation to citizens from that collapse, the public has every right to know about any new financial stability threats facing the nation.

Sitting in on that secret meeting will be representatives from the super secret Federal Reserve that took the elected members of Congress out of the loop as it spent years secretly funneling $16 trillion to Wall Street and foreign banks. Also present will be a representative from the increasingly secret SEC as well as other highly conflicted Federal regulators of Wall Street. The SEC will likely be represented by its Chair, Jay Clayton, who we previously reported had represented 8 of the 10 largest Wall Street banks in the three years prior to his assuming his SEC post last year.

The 24/7 cable news programs are consumed with investigating Russia. We’re not saying that’s not important but it’s happening while nothing is being reported about the growing dangers on Wall Street. The Republican-led Congress is consumed with funding wars against foreign terrorists. But it was neither Russia nor foreign terrorists that dealt America the two worst financial and economic crises in its history: the 1929-1932 and 2008-2010 Wall Street collapses and ensuing economic calamities. These occurred from well-documented illegal acts by Wall Street firms as their Federal regulators wore blindfolds.

The American public has only two choices today: allow the Trump administration to draw this dark curtain ever tighter around the actions of Wall Street and face another guaranteed financial system collapse; or march on Washington in mass protests until this era of robber baron secrecy ends.

GAO Data on Secret Emergency Lending Programs During  Financial Crisis

GAO Data on Secret Emergency Lending Programs During Financial Crisis