Search Results for: trillion

JPMorgan Chase Owns $2.2 Trillion in Stock Derivatives; Two-Thirds the Total for All Banks

By Pam Martens and Russ Martens: May 15, 2019 ~ According to the Office of the Comptroller of the Currency (OCC), the regulator of national banks, as of December 31, 2018 JPMorgan Chase Bank NA (the Federally-insured bank backstopped by U.S. taxpayers) held $2,212,311,000,000 ($2.2 trillion) in equity derivatives. Equity is another name for stock. The OCC also reported that all commercial banks in the U.S. held a total of $3.374 trillion in equity derivatives at the end of last year, meaning that for some very strange reason, JPMorgan Chase holds a 65.5 percent market share of bank trading in this derivatives market. Those trillion dollar figures are notional amounts, meaning the face value. The OCC defines “notional” like this: “The notional amount of a derivative contract is a reference amount that determines contractual payments, but it is generally not an amount at risk. The credit risk in a derivative … Continue reading

Sullivan & Cromwell’s Rodge Cohen: The Untold Story of the Fed’s $29 Trillion Bailout

Rodgin Cohen Speaking at a Bloomberg Conference in 2015

By Pam Martens and Russ Martens: May 2, 2019 ~  There is a little noticed audio tape of an interview conducted on August 5, 2010 by investigators for the Financial Crisis Inquiry Commission (FCIC), a body convened under the Fraud Enforcement Recovery Act of 2009 to investigate the 2008 financial collapse on Wall Street. The interview is with Rodgin (Rodge) Cohen, Senior Chairman of Sullivan & Cromwell, the preeminent go-to lawyer on Wall Street. Cohen makes a number of eyebrow-raising admissions during his interview. First, in response to a question, Cohen concedes that he was personally involved in the amendment contained in the Federal Deposit Insurance Corporation Improvement Act (FDICIA) that changed the Fed’s emergency lending powers under Section 13(3) of the Federal Reserve Act. That one-sentence amendment to Section 13(3) was interpreted by the Federal Reserve from December 2007 to mid-2010 as giving it carte blanche to shovel $29 … Continue reading

After a $354 Billion U.S. Bailout, Germany’s Deutsche Bank Still Has $49 Trillion in Derivatives

Deutsche Bank Headquarters in Frankfurt, Germany

By Pam Martens and Russ Martens: April 17, 2019 ~ On July 21, 2011, when the GAO released its audit of the Federal Reserve’s secret $16.1 trillion in bank loans during the financial crisis, a foreign bank ranked number 9 on the list of the largest borrowers. The loans went not just to the largest banks on Wall Street but to foreign derivative counterparties to the Wall Street banks. The foreign bank that ranked 9 on the list of the largest borrowers was Germany’s largest bank, Deutsche Bank, which took $354 billion in revolving loans from the U.S. Federal Reserve. According to an article in the Financial Times last week “Germany’s federal and state governments have spent €70bn on bailing out banks since the financial crisis, according to an estimate by Gerhard Schick, head of lobby group Finance Watch.” The figure of  €70bn is about 79 billion U.S. dollars. Why … Continue reading

Bernanke, Geithner, Paulson: The Fed Should Be Able to Make Secret Trillion Dollar Loans Again

Marketplace, an American Public Media Program, Interviews (left to right) Timothy Geithner, Hank Paulson and Ben Bernanke in March 2018

By Pam Martens and Russ Martens: September 10, 2018 ~ There seems to be a growing amount of concern these days about another epic financial crash on Wall Street. That, in itself, is a concern. After all, we’ve had only two great crashes in the past 89 years: one from 1929 to 1933 and one from 2008 to 2009. Why is another crash on the tip of so many tongues today? Last week JPMorgan Chase released a lengthy research report in which its analyst Marko Kolanovic suggested that in the event of another major Wall Street crisis, the Fed should not only have its emergency powers restored to buy up toxic debt with abandon from Wall Street but that the Fed might also have to buy up stocks – an unprecedented action for the U.S. central bank – or at least unprecedented as far as the public knows. The outrage … Continue reading

The $4 Trillion Answer to Why Turkey Is Rattling Wall Street Banks and Insurers

By Pam Martens and Russ Martens: August 13, 2018 ~ On Friday the Dow Jones Industrial Average closed with a loss of 196 points as contagion jitters from Turkey’s worsening situation rattled markets. Among the big Wall Street banks, these were the biggest losers: Citigroup, down 2.39 percent; Morgan Stanley, down 2.12 percent; Goldman Sachs, down 1.78 percent; Bank of America, down 1.30 percent; and JPMorgan Chase closed off by 0.98 percent. Deutsche Bank, the big German lender whose U.S. subsidiary has a big footprint on Wall Street, lost 4.68 percent. Deutsche Bank has now lost 41 percent of its market value since February. But the selloff didn’t stop there. Two big U.S. life insurers also tumbled on Friday. MetLife lost 3.19 percent while Prudential Financial was off by 2.97 percent. What do Wall Street banks and U.S. life insurers have to do with a selloff in Turkey’s currency? Not … Continue reading

Market Bubble? 5 Tech Stocks Go From $1.88 Trillion to $3.4 Trillion in Less than 3 Years

By Pam Martens and Russ Martens: March 28, 2018 After experiencing carnage at the end of last week, the Dow Jones Industrial Average lost 344.8 points yesterday or 1.43 percent of its value. But the tech-heavy Nasdaq closed down with a percentage loss of more than twice that amount at minus 2.93 percent. Individual tech stocks far outpaced the losses in the broader market with Facebook closing down 4.90 percent; Alphabet (parent of Google) closing down 4.57 percent; Microsoft ending the session with a loss of 4.60 percent; Amazon down 3.78 percent; and Apple losing a more modest 2.56 percent. Wall Street’s love affair with tech is rapidly turning into a “stormy” relationship. Back on August 27, 2015, we quoted Tan Teng Boo, the founder and CEO of Capital Dynamics, saying that just five U.S. stocks — Apple, Google, Microsoft, Facebook, and Amazon  — are worth more than the Frankfurt, … Continue reading

Stockman: $1.8 Trillion in New Treasury Debt Will Hit Bond Pits “Like a Tornado”

By Pam Martens and Russ Martens: February 28, 2018 Investors have been whiplashed so far this week and it’s only Wednesday morning. On Monday, the Dow rocketed ahead by 399 points. On Tuesday, it plunged by 299 points. What changed investor sentiment so dramatically in 24 hours? David Stockman, the former Director of the Office of Management and Budget under President Ronald Reagan who blogs at Contra Corner, appeared on CNBC yesterday to size up the situation. Commenting on the new Chairman of the Federal Reserve, Jerome Powell, who gave testimony for the first time in his new role before the House Financial Services Committee yesterday, Stockman said he thinks Powell is “missing three giant skunks sitting on the wood pile.” The biggest skunk according to Stockman is an “epic monetary fiscal collision” that Stockman says he hasn’t seen before in his lifetime. Stockman explained that starting this October, which … Continue reading

Meet the $4 Trillion Market that Donald Trump Just Bitch-Slapped

By Pam Martens and Russ Martens: October 5, 2017 According to Federal Reserve statistics, as of the end of the first quarter of this year, the U.S. municipal bond market consisted of $3.8 trillion of debt outstanding with retail investors owning 42 percent of the market. Life insurance companies, property and casualty insurers, banks, mutual funds and foreign buyers are also major holders of municipal bonds. Municipal bonds have performed well as a class over a century of booms and busts. They came through the Great Depression with an extremely low default rate. General obligation municipal bonds (GOs) are backed by the full faith and credit and taxing power of a jurisdiction like a state or county or city and GOs with AAA ratings are typically viewed as second in safety to issues of the U.S. government.  Municipal bonds issued to finance a project are classified as revenue bonds and … Continue reading

Financial Crash Analysis: $22.6 Billion in Homeowner Relief; $7.8 Trillion to Four Wall Street Banks

By Pam Martens and Russ Martens: January 11, 2017  As Goldman Sachs guys prepare to take the reins of power in Washington under the Trump administration, the Government Accountability Office (GAO) provided a tragic reminder on Monday regarding the power of the U.S. citizen versus their Wall Street overlords. The GAO released a study showing that as of October 31, 2016, the government “had disbursed $22.6 billion (60 percent) of the $37.51 billion Troubled Asset Relief Program (TARP) funds” that were directed at helping distressed homeowners as a result of the 2008 Wall Street financial crash and the resulting housing bust. Those paltry billions stand in stark contrast to the $7.8 trillion in near-zero interest loans that the Federal Reserve secretly funneled to just four Wall Street banks from 2007 to 2010. The Fed funneled $2.5 trillion to Citigroup; $2 trillion to Morgan Stanley; $1.9 trillion to Merrill Lynch; and … Continue reading

U.S. Quietly Drops Bombshell: Wall Street Banks Have $2 Trillion European Exposure

By Pam Martens and Russ Martens: January 3, 2017 Just 17 days from today, Donald Trump will be sworn in as the nation’s 45th President and deliver his inaugural address. Trump is expected to announce priorities in the areas of education, infrastructure, border security, the economy and curtailing the outsourcing of jobs. But Trump’s agenda will be derailed on all fronts if the big Wall Street banks blow up again as they did in 2008, dragging the U.S. economy into the ditch and requiring another massive taxpayer bailout from a nation already deeply in debt from the last banking crisis. According to a report quietly released by the U.S. Treasury’s Office of Financial Research less than two weeks before Christmas, another financial implosion on Wall Street can’t be ruled out. The Office of Financial Research (OFR), a unit of the U.S. Treasury, was created under the Dodd-Frank financial reform legislation … Continue reading

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

By Pam Martens and Russ Martens: January 21, 2016 According to a report from one of the regulators of national banks, the Office of the Comptroller of the Currency, as of September 30, 2015, insured U.S. commercial banks and savings associations had exposure to $192.2 trillion notional (face amount) of derivatives.  (Yes, that’s trillion with a “t”.) The report goes on to terrify with the revelation that only four banks hold 90.8 percent of all derivatives: Citigroup, JPMorgan Chase, Goldman Sachs and Bank of America. But that’s far from an accurate picture. Buried deep in the report is Table 2, which broadens the landscape beyond just the commercial banking units of the mega Wall Street firms to what is lurking in the holding companies. In Table 2 we learn that Morgan Stanley ranks right up there with the other big boys on Wall Street, holding $31 trillion notional in derivatives. … Continue reading

They’re Shouting from the Rooftops About Junk Bond Dangers – $2.2 Trillion Too Late

By Pam Martens and Russ Martens: October 1, 2015 An uncanny number of people woke up this week with the same thought – it’s time to panic over the size, structure and illiquidity of the junk bond market. (Not to put too fine a point on it, but Wall Street On Parade made the warning in 2013 and again on August 18 of this year.) On Tuesday morning, it was both Carl Icahn, the famous hostile takeover artist and hedge fund billionaire, along with the more staid academics at the International Monetary Fund (IMF), who issued junk bond warnings. (Junk bonds are corporate debt with ratings below investment grade, also known as “high yield” bonds.) Icahn released a video (see clip below) assigning blame to companies like BlackRock which have bundled illiquid junk bonds into Exchange Traded Funds (ETFs), listed them on the New York Stock Exchange, and sat back … Continue reading

Defining a Market Bubble: 5 U.S. Stocks Worth $1.88 Trillion and One of Them Can’t Figure Out How to Make Money

By Pam Martens and Russ Martens: August 27, 2015  That big so-called rally at the market close yesterday was not a rally but a short squeeze. That’s when the hedge funds that have put on short positions size up the amount of stock for sale at the close of trading and, if the amount is light, they decide to close out their short positions by buying stock to cover. On Tuesday, there was approximately $3.5 billion in orders to sell at the close, resulting in the late day selloff. Yesterday, there was only about $500 million to sell, making it risky to hold short positions, thus the short squeeze driving the Dow up 619 points at the close. Expect to see a lot more of these spikes, up or down, in the last two hours of trading. Assessing just how large the bubble has grown in U.S. markets as a … Continue reading

Treasury to SEC: You’re Flying Blind on the $4.1 Trillion Hedge Fund Risks

By Pam Martens and Russ Martens: August 4, 2015 The Dodd-Frank financial reform legislation just celebrated its fifth anniversary on July 21 and the gaping holes it left in the promise to protect our Nation from another systemic financial crash are becoming clearer every day. No other agency has done more to highlight these growing risks than the Office of Financial Research (OFR), created under Dodd-Frank as a unit of the U.S. Treasury. In its most recent report, it provides the stunning news that private hedge funds in the U.S. now control one-third of all assets under management in the financial services industry – a stunning $4.1 trillion when leverage is included. In February of this year, OFR released a jaw-dropping report showing dangerous levels of systemic and interconnected risk among some of the same Wall Street players that held pivotal roles in the crash of 2008. The report found … Continue reading

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

By Pam Martens and Russ Martens: March 4, 2015 Yesterday, the Senate Banking Committee held the first of its hearings on widespread demands to reform the Federal Reserve to make it more transparent and accountable. Senator Elizabeth Warren put her finger on the pulse of the growing public outrage over how the Federal Reserve conducts much of its operations in secret and appears to frequently succumb to the desires of Wall Street to the detriment of the public interest. Warren addressed the secret loans that the Fed made to Wall Street during the financial crisis as follows: “During the financial crisis, Congress bailed out the big banks with hundreds of billions of dollars in taxpayer money; and that’s a lot of money. But the biggest money for the biggest banks was never voted on by Congress. Instead, between 2007 and 2009, the Fed provided over $13 trillion in emergency lending … Continue reading

The New York Fed Has Contracted JPMorgan to Hold Over $1.7 Trillion of its QE Bonds Despite Two Felony Counts and Serial Charges of Crimes

By Pam Martens and Russ Martens: November 3, 2014 The Federal Reserve Board of Governors in Washington, D.C., which functions as the central bank of the United States, has farmed out much of its Quantitative Easing (QE) programs to the Federal Reserve Bank of New York since the financial crisis of 2008. The Federal Reserve Bank of New York has, in turn, contractually farmed out a hefty chunk of the logistics of that work to JPMorgan Chase in the last six years. Sitting quietly on the Federal Reserve Bank of New York’s web site is a vendor agreement and other documents indicating that JPMorgan Chase holds all of the Mortgage Backed Securities (MBS) that the New York Fed has purchased under its various Quantitative Easing programs. As of last Wednesday, that figure was $1.7 trillion dollars. (The New York Fed has confirmed that JPMorgan is custodian for these assets.) In … Continue reading

Here’s Why the Fed’s $4.45 Trillion Balance Sheet Is Not Going to Shrink

By Pam Martens and Russ Martens: October 30, 2014  Back on June 25 of this year, Wall Street On Parade ran the following headline: “BOE’s Carney: Inflated Central Bank Balance Sheet the New Normal; Expect to Hear the Same Conclusion from the U.S. Fed.” The day before our headline, Bank of England Governor, Mark Carney, had just explained to Parliament why their central bank’s balance sheet, bloated through quantitative easing, was not going to be shrinking anytime soon. Carney: “…I would define – picking up on what my colleagues have said – pre-crisis position as a position that’s consistent with the normal course of liquidity requirements of the banking system…What has changed, to the good, in terms of the banking system here is that through regulation and supervision we have put much more responsibility on the banks themselves to hold liquidity to manage liquidity shocks. And, as a consequence of … Continue reading

U.S. and China Lock Horns Over Audits; $1.4 Trillion in U.S. Stock Value at Risk

By Pam Martens: January 27, 2014 Most Americans would be stunned to learn that companies based in China, a country associated with accounting secrecy, have gained a foothold to the tune of over a trillion dollars on U.S. stock exchanges. According to Thomson Reuters, the market value of Chinese companies currently listed on the New York Stock Exchange and Nasdaq Stock Market is more than $1.4 trillion. Last week, U.S. investors learned the hard way that when China sneezes, the U.S. may catch pneumonia. Growth in China is slowing and there are growing fears that its massive overinvestment in real estate and manufacturing plants in recent years has led to unsustainable levels of Chinese business and bank debt. Stock markets in countries which have been major beneficiaries of the China growth story plunged at the end of last week, including a two-day drop of almost 500 points in the U.S. … Continue reading

$1 Trillion Student Debt Gets the President’s Attention; Too Bad It Doesn’t Get NYU’s

By Pam Martens: August 23, 2013 President Obama spoke to students yesterday at the State University of New York in Buffalo and at Henninger High School in Syracuse on his plans to make college more affordable for middle class families. Total student debt in the U.S. now exceeds $1 trillion and, according to the President, is crushing the ability of graduates to buy homes or start a business and thus holding back economic growth. On learning of the President’s new college affordability initiative, Senator Chuck Grassley of Iowa, who has been in a tug of war for the last six months with New York University (NYU), one of the most expensive universities in the country with a four-year tab estimated at $280,000 including dorm, released the following statement: “I agree with President Obama on reducing college costs and student debt.  One area for consideration is college spending on high executive … Continue reading

The Two Trillion Dollar Black Hole

By Pam Martens: November 13, 2008 Purge your mind for a moment about everything you’ve heard and read in the last decade about investing on Wall Street and think about the following business model: You take your hard earned retirement savings to a Wall Street firm and they tell you that as long as you “stay invested for the long haul” you can expect double digit annual returns. You never really know what your money is invested in because it’s pooled with other investors and comes with incomprehensible but legal looking prospectuses.  The heads of these Wall Street firms have been taking massive payouts for themselves, ranging from $160 million to $1 billion per CEO over a number of years. As long as new money keeps flooding in from newfangled accounts called 401(k)s, Roth IRAs, 529 plans for education savings, and hedge funds (each carrying ever greater restrictions for withdrawing your money and ever greater opacity) everything appears … Continue reading

The Federal Reserve Admits to $9 Trillion in Bailouts

By Pam Martens: December 20, 2010 On December 1, the Fed was forced to release details of 21,000 funding transactions it made during the financial crisis, naming names and dollar amounts. Disclosure was due to a provision sparked by Senator Bernie Sanders of Vermont. The voluminous data dump from the notoriously secret Fed shows just how deeply the Federal Reserve stepped into the shoes of Wall Street and, as the crisis grew and the normal channels of lending froze, the Fed effectively replaced Wall Street and money centers banks in terms of financing.  The Fed has thus far reported, without even disclosing specifics of its lending from its discount window, which it continues to draw a dark curtain around, that it supplied, in total, more than $9 trillion to Wall Street firms, commercial banks, foreign banks, corporations and some highly questionable off balance sheet entities. (Much smaller amounts were outstanding … Continue reading

Jeffrey Epstein Chaired a $6.7 Billion Company that Documents Suggest May Have Received a Secret Federal Reserve Bailout

By Pam Martens and Russ Martens: July 21, 2019 ~  According to a database created by The International Consortium of Investigative Journalists containing files leaked from the law firm Appleby, Jeffrey Epstein, who is under indictment as a sex trafficker and assaulter of underage girls, was the Chairman of Liquid Funding Ltd. from November 9, 2001 to at least March 19, 2007. The offshore business had been incorporated in Bermuda on October 19, 2000 and according to the Fitch ratings firm, it had $6.7 billion in outstanding liabilities in 2006. In a regulatory filing with the Securities and Exchange Commission in February 2003, Bear Stearns, the Wall Street investment bank that Epstein had resigned from under murky circumstances in 1981, confirmed that it was a 40 percent owner of Liquid Funding Ltd., writing as follows: “At November 30, 2002, the Company had an approximate 40% equity interest in Liquid Funding, Ltd. … Continue reading

Is There a Stealth Financial Crisis? Alarm Bells Are Ringing.

Withdrawals from His Flagship Fund on June 3, 2019 (Photo from Publicly Released Video)

By Pam Martens and Russ Martens: July 11, 2019 ~ Shhh! Don’t wake the Wall Street bank regulators from their decade-long slumber to whisper in their ear that the same critical signs they ignored in 2007 and early 2008 are rearing their ugly heads again. Let’s take a look at the clear warning signs that began in July 2007 and then contrast them against what is happening today. On July 17, 2007 Bear Stearns announced that two of its hedge funds, which had held about $1.5 billion in investor capital in the first quarter of the year, were now mostly worthless. On August 9, 2007 BNP Paribas, France’s largest publicly traded bank, announced it was freezing customer withdrawals from three of its funds, effectively preventing customers from accessing $2.2 billion. It cited “evaporation of liquidity,” and the inability “to value certain assets,” as a reason. Fast forward to today: On … Continue reading

With Three Felony Counts Already, Did JPMorgan Chase Really Need to Own a Ship Containing 20 Tons of Cocaine?

MSC Gayane Container Ship

By Pam Martens and Russ Martens: July 10, 2019 ~ Jamie Dimon, Chairman and CEO of the Wall Street mega bank, JPMorgan Chase, has weathered one scandal after another during his tenure, including the bank pleading guilty to an unprecedented three criminal felony counts in the past five years. Now the bank is back in the news for owning a massive container ship which was seized last week in the Philadelphia seaport by U.S. Customs and Border Protection following the discovery of 20 tons of cocaine located in containers on the ship on June 17. The cocaine is estimated to have a street value of $1.3 billion. The container vessel is the MSC Gayane and was being operated by the global shipping firm, Mediterranean Shipping Company (MSC). The vessel is the largest ever to be seized in the 230-year history of U.S. Customs and Border Protection, according to the CBP’s … Continue reading

Meet the JPMorgan Whale that Ate Deutsche Bank’s Stock Trading Business

By Pam Martens and Russ Martens: July 8, 2019 ~ Yesterday, Deutsche Bank announced it would be cutting its payroll by approximately 18,000 jobs over the next three years and exiting its stock trading business, along with other restructuring moves like creating a “bad bank” to hold toxic assets. What could possibly force a global bank to shed stock trading? According to the most recent report from the Office of the Comptroller of the Currency (OCC), the regulator of national banks in the United States, four U.S. commercial banks made $8.79 billion in trading revenues in the first quarter of this year. Of that amount, JPMorgan Chase Bank NA represented 60 percent or $5.29 billion. (The other three banks were Citibank, Goldman Sachs Bank USA and Bank of America.) Just to be clear, this is not how much each bank made from trading in all their divisions, this is just … Continue reading