By Pam Martens and Russ Martens: September 24, 2021 ~ Yesterday, President Biden took the bold step of nominating Saule Omarova to head the Office of the Comptroller of the Currency (OCC), a top federal bank regulator. Omarova is a Law Professor at Cornell and has written extensively on systemic risk containment. Prior to joining Cornell in 2014, Omarova was Associate Professor at the University of North Carolina School of Law. Prior to her academic career, Omarova worked for the corporate law firm, Davis Polk & Wardwell, in their Financial Institutions Group. In 2006-2007, she served at the U.S. Department of the Treasury as a Special Advisor for Regulatory Policy to the Under Secretary for Domestic Finance. Omarova represents a triple threat to the insidious behavior of mega banks on Wall Street: she has an in-depth knowledge of how they operate; she is not timid about explaining it to investigative bodies … Continue reading →

By Pam Martens and Russ Martens: September 23, 2021 ~ There was a strange occurrence at Fed Chairman Jerome Powell’s press conference yesterday. Hannah Lang, a reporter for American Banker, asked Powell a question about Wells Fargo. Powell read his answer directly from a script in a binder he had on the podium. (You can watch the exchange in the video clip below. Be sure not to miss the exchange that follows Lang’s question when Mike Derby of the Wall Street Journal grills Powell on the outrageous trading that Dallas Fed President Robert Kaplan was doing last year to enrich himself (while his country was in a declared National Emergency and pandemic crisis). Lang mentioned that Senator Elizabeth Warren had cited “what she called ungovernable behavior” from Wells Fargo and called for Powell to break up the bank by revoking its bank holding company charter.  Lang asked  under what circumstances the … Continue reading →

By Pam Martens and Russ Martens: September 22, 2021 ~ Federal Reserve Chairman Jerome Powell took a few wonky questions from various reporters at his press conference today and then Jeanna Smialek, Federal Reserve and Economy reporter for the New York Times, was called on. Smialek was the first reporter to lead the elephant in the room out into the open. The exchange went as follows: Smialek: “Prior to recent media reports, were you aware of the kind of security buying and selling that [Dallas Fed and Boston Fed] Presidents Kaplan and Rosengren were participating in last year? And I wonder if you thought those were appropriate?” Powell: “So, no I was not aware of the specifics of what they were doing. So let me just say a couple of things about this subject. We understand very well that the trust of the American people is essential for us to effectively … Continue reading →

By Pam Martens and Russ Martens: September 22, 2021 ~ Michael Derby of the Wall Street Journal broke the story on September 7 that Dallas Fed President Robert Kaplan was trading in and out of millions of dollars of individual stock positions in 2020. Last year was a year of unprecedented crisis when Kaplan was a voting member of the Federal Open Market Committee (FOMC) and had access throughout the year to non-public, market-moving information. On September 18, Wall Street On Parade reported that Kaplan was not just trading individual stocks but was, astonishingly, also trading S&P 500 futures contracts in transactions of more than $1 million in 2020. The most popular and liquid S&P 500 futures contract is the E-mini, which can provide a trader with as much as 95 percent leverage. The stock exchanges are only open in the U.S. from 9:30 a.m. to 4 p.m. (EDT) weekdays, but … Continue reading →

By Pam Martens and Russ Martens: September 21, 2021 ~ Fortunately for Americans, the keen-eyed Wall Street watchdog group, Better Markets, is not living in the same alternative reality universe as the cable financial news network, CNBC. Last Friday, CNBC published a crazy headline regarding Dallas Fed President Robert Kaplan trading tens of millions of dollars of individual stocks and S&P 500 futures in 2020 while Boston Fed President Eric Rosengren traded in and out of REITs (Real Estate Investment Trusts). The trading occurred despite both men being privy to non-public, market moving information coming from the Federal Reserve, the central bank of the United States. CNBC’s headline read: “After years of being ‘squeaky clean,’ the Federal Reserve is surrounded by controversy.” CNBC was royally roasted on Twitter for its “squeaky clean” fairy tale. CNBC’s flight from reality comes after the Fed’s former Chair, Janet Yellen, went straight from her position at … Continue reading →

By Pam Martens and Russ Martens: September 20, 2021 ~ Global bank stocks took a bruising today as questions grow as to just how much exposure large financial institutions have to the teetering China Evergrande Group, a real estate development company in China which owes more than $300 billion in debt that it can’t repay. The Dow Jones Industrial Average shed 614.4 points by the closing bell today, or 1.78 percent, while global mega banks were down anywhere from more than 7 percent for foreign banks to more than 3 percent for U.S. mega banks. (See chart below.) A big question roiling markets is who has exposure as a counterparty to Credit Default Swaps on China Evergrande Group or other troubled Chinese companies. Where there is lack of transparency on such an issue, investors tend to sell first and ask questions later. Many of the China-related ETFs that trade in the … Continue reading →

By Pam Martens and Russ Martens: September 20, 2021 ~ Fed watchers are stunned that Fed Chair Jerome Powell thinks it is appropriate for the Fed to investigate itself following one of the most arrogant and brazen trading scandals in the history of the Fed. The focal point of that scandal is Robert S. Kaplan, the President of the Dallas Fed, who held non-public, market moving information throughout last year but nonetheless traded in and out of tens of millions of dollars of individual stocks as well as – wait for it – S&P 500 futures, an instrument used by speculators to make highly leveraged, directional bets on the market. S&P 500 futures extend the trading day to almost 24/7 from Sunday evening to Friday night. The type of trading done by Kaplan appears to be expressly prohibited by the Code of Conduct of the Dallas Fed. Appendix A on “Disqualifying … Continue reading →

By Pam Martens and Russ Martens: September 18, 2021 ~ A transaction that has been missed by major news outlets on the financial disclosure form for Dallas Fed President, Robert Kaplan, is a line item showing that Kaplan made “multiple” trades of more than $1 million in S&P 500 futures. This is a stunning revelation for a multitude of reasons. First, Kaplan’s financial disclosure form shows that he already had exposure to the S&P 500 through more than $1 million in an S&P 500 Exchange Traded Fund (ETF), which trades during regular stock market hours. Using S&P 500 futures gave Kaplan access to making directional bets on where the market would go after the stock market closed, which is typically when the Fed makes market-moving announcements. The most popular and liquid S&P 500 futures contract is the E-mini S&P 500. A person can get as much as 95 percent leverage on … Continue reading →

By Pam Martens and Russ Martens: September 17, 2021 ~ On Tuesday of this week, Bloomberg News published its umpteenth negative article on the San Francisco-headquartered bank, Wells Fargo. This time around, the article was highlighting Senator Elizabeth Warren calling for Wells Fargo to be broken up, with its federally insured bank separated from its Wall Street businesses. Bloomberg News syndicates its articles, so this story was quickly splashed all over other news outlets. And that’s the way it has been going since 2017. When Senator Warren bashes Wells Fargo, she gets lots of coverage by New York media outlets. Since March of 2018, Bloomberg News has published more than 80 negative articles on Wells Fargo with headlines like these: Wells Fargo CEO Abruptly Steps Down, Succumbing to Scandals; Wells Fargo’s CEO Disputes Claim His Bank Is Too Big to Manage; Elizabeth Warren on Wells Fargo CEO’s Departure: ‘About Damn Time’; Ex-Wells Fargo Bosses Face … Continue reading →

By Pam Martens and Russ Martens: September 16, 2021 ~ During the financial collapse of 2008, money market funds found themselves holding toxic paper that no one wanted to buy. In order to stop panic runs on money market funds, on September 19, 2008 the U.S. Treasury Department issued a statement indicating it would guarantee more than $3.5 trillion in money market funds. As COVID-19 concerns took root in March of last year and the stock market plunged, the Fed launched another bailout program for money market funds on March 18, 2020. The program was called the Money Market Mutual Fund Liquidity Facility (MMLF) and was run out of the Federal Reserve Bank of Boston. Going forward, the Fed does not want to be in the position of having to bail out more privately owned money market funds. So the Fed has been seducing money market funds and other financial institutions … Continue reading →