By Pam Martens and Russ Martens: March 30, 2020 ~ In 2015, the legendary Wall Street investor, Carl Icahn, called BlackRock “an extremely dangerous company.” (See video clip below.) Icahn was specifically talking about BlackRock’s packaging of junk bonds into Exchange Traded Funds (ETFs) and calling them “High Yield,” which the average American doesn’t understand is a junk-rated bond. The ETFs trade during market hours on the New York Stock Exchange, giving them the aura of liquidity when one needs it. Icahn said: “I used to laugh with some of these guys…I used to say, you know, the mafia has a better code of ethics than you guys. You know you’re selling this crap.” Icahn warned that “if and when there’s a real problem in the economy, there’s going to be a rush for the exits like in a movie theatre, and people want to sell those bonds, and think … Continue reading →

By Pam Martens and Russ Martens: March 29, 2020 ~ Warren Buffet is credited with the quote: “Only when the tide goes out do you discover who’s been swimming naked.” Friday’s closing prices among some of the heavily interconnected mega Wall Street banks and insurance companies known to be counterparties to Wall Street’s derivatives appeared to show who’s swimming naked in the realm of derivatives – naked meaning who has sold derivative protection (gone short the risk) on something that is blowing up. As the chart above shows, the S&P 500 stock index (SPX) closed with a loss of 3.37 percent while the following three stocks closed with more than double that percentage of loss: Deutsche Bank was down by 7.44 percent; JPMorgan shed 7.12 percent while AIG was off by 7.27 percent. When the Federal Reserve needs to create a hodgepodge of  secretive Special Purpose Vehicles (SPVs) and run … Continue reading →

By Pam Martens and Russ Martens: March 27, 2020 ~ The New York Fed supervises four of the most dangerous banks in America: Citigroup, JPMorgan Chase, Goldman Sachs and Morgan Stanley. That opinion is not just ours but is documented by data from federal agencies. All four of these banks own federally-insured commercial banks that are backstopped by the U.S. taxpayer while also gambling in the stock market through their own Dark Pools and in trillions of dollars of derivatives. All four of these banks received tens of billions of dollars in bailout money during the 2007-2010 financial crash, which was brought on by their greed and corrupt activities in the derivatives and subprime market. Citigroup’s losses were of such magnitude that it became insolvent, turned into a 99 cent stock, and yet secretly received the largest bailout in global banking history from the same regulator who had allowed it … Continue reading →

By Pam Martens and Russ Martens: March 26, 2020 ~ The U.S. Senate voted 96-0 late yesterday on a massive bailout of Wall Street banks versus a short-term survival plan for American workers thrown out of their jobs – and potentially their homes. The text of the final bill was breathtaking in the breadth of new powers it bestowed on the Federal Reserve, including the Fed’s ability to conduct secret meetings with no minutes provided to the American people. The House of Representatives has yet to vote on the bill. The bill provides specific sums that can be made as loans or loan guarantees to passenger airlines ($25 billion), cargo airlines ($4 billion), and loans and loan guarantees to businesses necessary to national security ($17 billion). But when it comes to the money going to the Federal Reserve and then out the door to Wall Street, the legislation says only … Continue reading →

By Pam Martens and Russ Martens: March 25, 2020 ~ Senate Majority Leader Mitch McConnell and New York State Senator and Minority Leader Chuck Schumer trotted out to the Senate floor after midnight last night to announce that they had reached a deal on the government stimulus package – the text of which the American public has not seen and only snippets of which have been seen by the members of Congress. Neither the Senate nor the House of Representatives have yet to vote on the bill. Americans got their first whiff that this was going to be another massive giveaway to Wall Street banks, just as happened from 2007 to 2010, when White House economic adviser Larry Kudlow appeared at the White House briefing yesterday evening. Kudlow revealed that the stimulus plan is actually a $6 trillion package — $2 trillion to struggling Americans and $4 trillion to dispense … Continue reading →

By Pam Martens and Russ Martens: March 24, 2020 ~ The chart that tells you how all of today’s economic troubles are going to end is not the bar graph of new deaths from coronavirus in Italy versus deaths in the U.S. It’s the chart that shows the number of potential deaths among the banks and insurance companies that have gorged themselves on risky derivatives and serve as counterparties to each other in a daisy chain of financial contagion. The chart above is why the Federal Reserve is throwing unprecedented sums of money in all directions on Wall Street. Because despite being a primary regulator to these massive bank holding companies, the Fed has no idea who is actually in trouble on derivative trades, other than looking at a chart like the one above. The chart above also justifies the Democrats refusing to sign off on the fiscal stimulus legislation … Continue reading →

By Pam Martens and Russ Martens: March 23, 2020 ~ For want of a mask the largest economy in the world has been gutted, with Goldman Sachs now projecting that U.S. GDP could contract by as much as 24 percent in the second quarter. New York City, a major contributor to U.S. GDP, is now the epicenter of coronavirus cases in the U.S. We saw this as a likely outcome from the moment that we learned that droplets could be spread from person to person through the air. According to the Center for Sustainable Systems at the University of Michigan, “the average population density of the U.S. is 87 people per square mile.” But in New York City, “the population density is 27,012 people per square mile,” far greater than any other major city in America. Let that sink in for a moment. The population density in New York City … Continue reading →

By Pam Martens and Russ Martens: March 23, 2020 ~ Without one vote by an elected official, the Federal Reserve just became a brand new national legislative body. It will, without any oversight in Congress, decide what corporations and businesses to save and which to let fail. While the corporations and small businesses will receive “billions,” Wall Street’s mega banks and trading houses will, once again, have trillions of dollars of toxic securities removed from their balance sheets, including plunging stocks through the Fed’s Primary Dealer Credit Facility. The Fed also announced that its purchases of Treasury and Mortgage-Backed Securities (MBS) will now be limitless, rather than capped at a total of $500 billion. The reason for that change is that the Fed blew through $272 billion in Treasury purchases and $68 billion in MBS purchases just last week alone, already using up $340 billion of its $500 billion allotment … Continue reading →

By Pam Martens and Russ Martens: March 22, 2020 ~ According to the most recent report from the regulator of national banks, the Office of the Comptroller of the Currency (OCC), JPMorgan Chase has exposure to $1.2 trillion in Credit Default Swaps while Citibank has exposure to $1.76 trillion for a combined total of $2.96 trillion as of September 30, 2019. According to the same report, the total exposure to Credit Default Swaps among all national banks in the U.S. is $3.7 trillion – meaning that just these two banks are responsible for 80 percent of that exposure. As of this past Friday, JPMorgan Chase had lost 39.3 percent of its common equity capital in the past five weeks while Citigroup, parent of Citibank, had lost 51.7 percent. That left JPMorgan Chase with just $256.68 billion in market cap versus Citigroup’s meager $79.86 billion. One of our readers emailed us … Continue reading →

By Pam Martens and Russ Martens: March 21, 2020 ~ Above is the chart that has the Federal Reserve and its Wall Street money funnel (a/k/a New York Fed) chewing on their worry beads and rapidly rolling out their alphabet soup of Wall Street bailout programs in a replay of their playbook during the 2007-2010 Wall Street collapse. While Fed and Treasury officials have been repeatedly assuring Americans that these Wall Street behemoth banks have plenty of capital, they’ve actually been bleeding their common equity capital faster than a snow cone in July. In just the past five weeks, from the close of trading on Friday, February 14 through the close of trading on Friday, March 20, five of the largest Wall Street banks have lost an average of 45 percent of their common equity capital. Adding to the embarrassment for the Federal Reserve, Citigroup, the bank it propped up … Continue reading →

By Pam Martens and Russ Martens: March 19, 2020 ~ The Fed’s H.4.1 report was released at 4:30 p.m. today and it shows that the Federal Reserve’s balance sheet has skyrocketed to $4.7 trillion. It also shows that as of yesterday, its repo loans to the trading houses on Wall Street had soared to a total of $441.9 billion outstanding while borrowings from its Discount Window added another $28.2 billion, bringing the combined total to over $470 billion in loans outstanding. Wall Street has been receiving hundreds of billions of dollars a week in assistance from the Fed since September 17, 2019 while struggling Americans have yet to see a dime of assistance to help offset job losses from the coronavirus outbreak. The Fed doesn’t have to wait for a vote in Congress to funnel $9 trillion in cumulative loans to Wall Street. It can create an unlimited amount of … Continue reading →

By Pam Martens and Russ Martens: March 19, 2020 ~ U.S. Treasury Secretary Steve Mnuchin and Wall Street pundits are all over cable news, repeating the mantra that “this is nothing like the last financial crisis,” while seeking to lay the blame for all of the newly-announced bailout measures for Wall Street at the feet of the coronavirus. But in terms of Wall Street privatizing profits and socializing losses, this is exactly like the last financial crisis. Wall Street’s crisis has a specific launch date: September 17, 2019. That’s when the Fed, for the first time since the last financial crisis, began dumping hundreds of billions of dollars a week into Wall Street’s trading houses. That program, called “repo loans,” now tallies up to more than $9 trillion in cumulative loans made to Wall Street at super-cheap borrowing rates. The first article we wrote on that Fed program was dated … Continue reading →

By Pam Martens and Russ Martens: March 18, 2020 ~ The Federal Reserve Board of Governors announced at 6 P.M. last evening that it is following the direction of Steve Mnuchin, the former foreclosure king who now serves as U.S. Treasury Secretary, and authorizing the reinstatement of a hideously operated, multi-trillion dollar bailout program for Wall Street’s trading houses known as the Primary Dealer Credit Facility (PDCF). Veterans on Wall Street think of it as the cash-for-trash facility, where Wall Street’s toxic waste from a decade of irresponsible trading and lending, will be purged from the balance sheets of the Wall Street firms and handed over to the balance sheet of the Federal Reserve – just as it was during the last financial crisis on Wall Street. The Fed fought for years in court to keep the details of the PDCF and its sibling Wall Street bailout programs a secret … Continue reading →

By Pam Martens and Russ Martens: March 17, 2020 ~ The U.S. stock market set new records yesterday – all of them bad. The Dow Jones Industrial Average suffered its worst point loss in history, closing down 2,997 points at 20,188.52, which effectively erases all of its gains in the last three years. On January 20, 2017, when Donald Trump was sworn in as President, the Dow closed at 19,827. It’s now grown by just 1.8 percent in total over that span of time. The Dow also had its second worst percentage loss in history yesterday, losing 12.93 percent. That loss is only exceeded by Black Monday, October 19, 1987, when the Dow lost 22.6 percent. It barely beats out October 28, 1929 when the Dow lost 12.8 percent and ushered in what would become the worst stock market crash in history. From late 1929 to 1933 the stock market … Continue reading →

By Pam Martens and Russ Martens: March 16, 2020 ~ Last evening, it became painfully clear that the Board of Governors at the Federal Reserve do not understand the inner workings of Wall Street. After prattling on for months about the need to rebuild “ample reserves” at the behemoth Wall Street banks after the Fed was forced on September 17 to become the liquidity provider of last resort to the tune of $9 trillion cumulatively thus far, the Fed flipped its thinking on a dime yesterday and sent markets into a panic. As of 8:55 a.m. this morning, S&P 500 futures are locked, limit down, suggesting a steep drop in stocks at the open of trading at 9:30 a.m. Along with a series of other measures to prop up liquidity on Wall Street, the Federal Reserve Board of Governors announced last evening that it “has reduced reserve requirement ratios to … Continue reading →

By Pam Martens and Russ Martens: March 14, 2020 ~ On February 12, 2020, the Dow Jones Industrial Average closed at 29,551.42. Yesterday, March 13, the Dow closed at 23,185.62 -– a loss of 6,365.80 points in one month’s time, or 21.54 percent. In 2008, the greatest financial calamity since the Great Depression, the Dow had lost 2,339.60 points or 21.4 percent one month after the frightening events of September 15, 2008 when Lehman Brothers filed bankruptcy, Merrill Lynch had to be taken over by Bank of America, and one day before the U.S. government seized the giant insurer, AIG, because it couldn’t pay the tens of billions of dollars in derivative bets it had made with the mega banks on Wall Street. On this past Friday morning, in what appeared to be an effort to restore confidence on Wall Street, U.S. Treasury Secretary Steve Mnuchin gave an interview on … Continue reading →

By Pam Martens and Russ Martens: March 13, 2020 ~ The Federal Reserve Board of Governors has acknowledged to Wall Street On Parade that it has 233 documents that might shed some light on why JPMorgan Chase was allowed by the Fed to draw down $158 billion of the reserves it held at the Fed last year, creating a liquidity crisis in the overnight loan market according to sources on Wall Street. After taking four months to respond to what should have been a 20-business day turnaround on our Freedom of Information Act request, the Federal Reserve denied our FOIA in its entirety. (Our earlier request to the New York Fed resulted in the same kind of stonewalling. See The New York Fed Is Keeping JPMorgan’s Secrets Close to Its Chest.) The Wall Street liquidity crisis forced the Federal Reserve, beginning on September 17 of last year, to begin making … Continue reading →

By Pam Martens and Russ Martens: March 12, 2020 ~ Making the most unprecedented announcement in the history of Wall Street, the Federal Reserve Bank of New York announced today that it will be offering $500 billion in 3-month repo loans to its primary dealers (Wall Street trading firms) today at 1:30 p.m. That $500 billion comes on top of the $198.10 billion the New York Fed loaned the street in its morning repo operations. Tomorrow, the New York Fed said it will offer its primary dealers another $500 billion in a 3-month loan and another $500 billion in a one-month loan, bringing the two-day total to potentially more than $1.7 trillion being offered at super low interest rates. (The Fed will also offer its regular one-day loan of $175 billion tomorrow.) These are staggering, unprecedented sums being offered by the Fed while it simultaneously claims that the Wall Street … Continue reading →

By Pam Martens and Russ Martens: March 12, 2020 ~ There has been a lot of delusional talk about the strong capital levels of the mega banks on Wall Street, not only from the Federal Reserve, but also from Wall Street analysts spreading fantasies about the banks on cable news programs. We took an afternoon off last Friday to hear what was being said about the banks on CNBC. We were stunned to hear Mike Mayo, a long-tenured bank analyst on Wall Street, who currently works for Wells Fargo Securities, deliver a huckster-like assessment of the mega Wall Street banks. Mayo said this: “The banking industry has the strongest balance sheet in a generation. Now think about this: the banks have added $1 trillion of additional capital – that’s $1 trillion with a T; $2 trillion of additional cash; $3 trillion of additional deposits. You have a Federal Reserve stress … Continue reading →

By Pam Martens and Russ Martens: March 11, 2020 ~ The little people in America will have to continue to wait to hear any concrete plans for their government to provide financial relief to them for business disruptions resulting from the coronavirus. But Wall Street banks and their sprawling trading desks got the word today that the Fed’s money gusher (repo loans) that began on September 17 of last year will offer them up another $270 billion in cold hard cash at unprecedented low interest rates tomorrow. The Fed announced that its 1-day emergency loans that it has been making each weekday will increase to as much as $175 billion a day beginning tomorrow; its 14-day loans, which will continue to be offered twice a week, will remain at the elevated amount of $45 billion; and the Fed will add three one-month loans of a whopping $50 billion each. The … Continue reading →

By Pam Martens and Russ Martens: March 11, 2020 ~ There has been the feeling of an invisible hand in the miraculous comeback of Democratic presidential candidate Joe Biden. Biden lost all three of the first races in Iowa, New Hampshire and Nevada, then spiraled to a long series of state victories despite a lackluster and sometimes rambling performance in the presidential debates. Since the invisible hand in unlikely elections always has a money trail somewhere, we decided to pull back the dark curtain using campaign financing data at the Center for Responsive Politics (OpenSecrets.org). The name of the giant Wall Street law firm – Paul, Weiss, Rifkind, Wharton & Garrison LLP – emerges as a common denominator. Paul Weiss has not only been a major donor to the Biden campaign but it was simultaneously a major donor to the campaigns of the four presidential candidates who dropped out of … Continue reading →

By Pam Martens and Russ Martens: March 10, 2020 ~ President Donald Trump is bringing a pea shooter to a gunfight. If you look carefully at the charts on this page from yesterday’s trading bloodbath, it’s clear that there is a deep financial crisis playing out. The idea that this can be remedied with a payroll tax cut is the stuff of tooth fairies. And this crisis didn’t begin with the coronavirus. Headlines about the virus did not start appearing in the U.S. until January of this year. But the Federal Reserve began making hundreds of billions of dollars each week in cheap loans to Wall Street’s banks on September 17, 2019 — the first time it had done this since the 2008 financial crisis. You can earmark September 17, 2019 as the actual date that this Financial Crisis II got underway. All of the toothless financial reforms of the … Continue reading →

By Pam Martens: March 9, 2020 ~ In early afternoon trading, West Texas Intermediate, the domestic crude oil in the U.S., had lost over 20 percent on the day, 39 percent in the last 18 calendar days and 48 percent from its peak this year. The panic selling resulted from a failed OPEC meeting with its allies last week when Russia refused to go along with crude oil production cuts proposed by OPEC to shore up the price of crude. Following the failed meeting, Saudi Arabia began to dramatically discount its oil prices to customers to grab market share. It reminded me of an earlier Saudi oil price war in 1986 – without the coronavirus to add to the panic. In 1986 I was working at Shearson with newly acquired stock and commodity licenses. I had the good fortune of sitting next to a very savvy female oil trader who … Continue reading →