Powell and Yellen Say the Banking System Is Sound as Another Global Bank Teeters

By Pam Martens and Russ Martens: March 24, 2023 ~ The reassurances of Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Janet Yellen that the U.S. banking system is sound, stand in sharp contrast to what is happening in markets. This week, the shorts have found another easy new global bank target to try to take down after making a bundle of money betting against Credit Suisse, which was taken over for 82 cents a share on Sunday by its Swiss competitor, UBS. This time the global banking target is Deutsche Bank, a global behemoth we have warned about ad nauseum here at Wall Street On Parade. Deutsche Bank was a $120 dollar stock prior to the financial crisis in 2008. It closed yesterday at $9.65 in New York and is down another 10 percent in early morning trading in Europe. The weakness in Deutsche Bank is spilling over into … Continue reading

Citigroup’s Citibank Took the Largest Amount of Loans from the FHLB of NY in 2022, Reminiscent of FHLB Loans Taken by Silvergate, SVB, Signature, and First Republic Bank

Jane Fraser, Citigroup CEO

By Pam Martens and Russ Martens: March 22, 2023 ~ On March 13 we published the chart below, showing the ten financial institutions that had taken the largest loan advances from the Federal Home Loan Bank of San Francisco as of year-end 2022. It’s a very ominous sign that the bank at the top of the list, Silicon Valley Bank, collapsed and is now under the control of the Federal Deposit Insurance Corporation (FDIC). Silicon Valley Bank had $212 billion in assets as of year-end 2022, making it the second largest bank failure in U.S. history. The largest failure was Washington Mutual in 2008, with approximately $300 billion in assets. The second bank on the list, First Republic Bank (ticker FRC), has seen its share price collapse, had its debt downgraded deeper into junk by S&P Global on Sunday, and is experiencing an exit stampede by depositors. The sixth bank on … Continue reading

At Year End, JPMorgan Chase Held Over $1 Trillion in Uninsured Deposits Versus $119 Billion at First Republic

By Pam Martens and Russ Martens: March 21, 2023 ~ Jamie Dimon is the Chairman and CEO of JPMorgan Chase, the largest bank in the U.S., which is also ranked the riskiest global bank by its regulators. But instead of getting his own house in order in the midst of a banking crisis, Dimon has been peculiarly focused elsewhere. Over the past five days, Jamie Dimon’s legions of publicists have been burning up the phone lines with reporters, pushing the narrative that Jamie Dimon is some kind of financial wizard who needs to have a seat at the table to save the regional bank, First Republic Bank. (Scroll down here to see the exhaustive public relations effort that has gone into this narrative.) Last Thursday, news hit the wire services that Dimon had lined up 11 banks willing to place $30 billion in uninsured deposits into First Republic Bank. JPMorgan Chase, … Continue reading

UBS Was Quietly Bailed Out in 2008; Now It’s Getting a $173 Billion Backstop to Buy Credit Suisse at 82 Cents a Share

Credit Suisse (Thumbnail)

By Pam Martens and Russ Martens: March 20, 2023 ~ Yesterday, the Swiss banking giant, UBS, agreed to a shotgun wedding with its collapsing long-time Swiss rival, Credit Suisse. Switzerland has committed $173 billion in loans and guarantees to the combined firm. A key player in this deal was the central bank of Switzerland, the Swiss National Bank. That’s the very same central bank that had quietly bailed out UBS during the financial crisis of 2008 with the assistance of dollar swap lines from the Federal Reserve (the “Fed”) – the central bank of the U.S. Yesterday, the Fed announced the return of those emergency dollar swap lines as the shotgun wedding of UBS and Credit Suisse failed to quell a spreading banking panic. The way this UBS bailout went down in 2008 was illuminated in the audit of the Fed’s emergency bailout facilities from December 2007 to July 2010 that was … Continue reading

JPMorgan’s High Risk Footprint; Bloomberg News as PR Agent for Jamie Dimon; and the Untold Story of the Failed “Rescue” of First Republic by the Mega Banks

Jamie Dimon Sits in Front of Trading Monitor in his Office (Source -- 60 Minutes Interview, November 10, 2019)

By Pam Martens and Russ Martens: March 17, 2023 ~ At 6:33 a.m. this morning, this big, bold headline appeared at the very top of Bloomberg News web page: “How Dimon and Yellen Helped Secure $30 Billion Lifeline for First Republic.” This headline is part of a very long, highly questionable promotion of Jamie Dimon by Bloomberg News as the wunderkind of Wall Street banking. In reality, under Dimon’s tenure as Chairman and CEO, JPMorgan Chase has been on an unprecedented crime spree, including being charged with five felony counts by the U.S. Department of Justice, and his bank is annually ranked by U.S. banking regulators as well as the Basel Committee on Banking Supervision as the riskiest bank on the planet. (See charts at this link at the U.S. Treasury’s Office of Financial Research. Give the page time to load the charts.) This morning’s headline at Bloomberg News was clearly … Continue reading

The Next Bomb to Go Off in the Banking Crisis Will Be Derivatives

Janet Yellen

By Pam Martens and Russ Martens: March 16, 2023 ~ U.S. Treasury Secretary Janet Yellen finds herself in a very dubious position. Under the Dodd-Frank financial reform legislation of 2010, the U.S. Treasury Secretary was given increased powers to oversee financial stability in the U.S. banking system. This increase in power came in response to the 2008 financial crisis – the worst financial collapse since the Great Depression. The legislation made the Treasury Secretary the Chair of the newly created Financial Stability Oversight Council (F-SOC), whose meetings include the heads of all of the federal agencies that supervise banks and trading on Wall Street. The legislation also required the Treasury Secretary’s authorization before the Federal Reserve could create any more of those $29 trillion emergency bailout programs for the mega banks – which had tethered themselves to casino trading on Wall Street since the repeal of the Glass-Steagall Act in 1999. … Continue reading

Moody’s Downgrades Entire U.S. Banking System; Credit Suisse Plummets. Welcome to Banking Crisis 3.0

Federal Reserve Building, Washington, D.C.

By Pam Martens and Russ Martens: March 15, 2023 ~ The “Related Articles” linked below (a tiny sampling of relevant articles) will remind our readers just how long and in how many different ways we have been attempting to warn that the U.S. banking system was incompetently structured and at risk of systemic contagion. We have also repeatedly warned that the crony, captured Fed was the worst possible banking supervisor and should be stripped of its bank regulatory powers and restricted to setting monetary policy. We have repeatedly cautioned, citing experts in the field, that the Fed’s stress tests were little more than a placebo and would not prevent the next banking crisis. (Check out our numerous articles at this link. Scroll down.) On July 29 of last year we wrote that Wall Street Megabanks’ Multi-Billion Dollar Blunders Suggest Money Controls as Good as George Bailey’s Uncle Billy and summed up … Continue reading

Two Fed-Supervised Banks Blew Up Last Week; Two More Dropped Over 40 Percent Yesterday; and the Fed Wants to Investigate Itself — Again

Jerome Powell (Thumbnail)

By Pam Martens and Russ Martens: March 14, 2023 ~ Last Wednesday, federally-insured Silvergate Bank announced that it was closing shop and liquidating. Its parent’s stock price (Silvergate Capital, ticker SI) had lost over 90 percent of its value over the prior year; it was under a Justice Department investigation for how it moved money for crypto-kingpin Sam Bankman-Fried’s house of frauds; and its depositors were fleeing. Oh – and by the way – its primary regulator was the Federal Reserve Bank of San Francisco. Last Friday, California state regulators closed Silicon Valley Bank and the Federal Deposit Insurance Corporation (FDIC) became the receiver. Its stock price had lost over 80 percent of its market value over the prior year; $150 billion of its $175 billion in deposits were uninsured, either because they exceeded the $250,000 FDIC cap and/or they were foreign deposits. The bank was effectively operating as a Wall … Continue reading

Silicon Valley Bank Was a Wall Street IPO Pipeline in Drag as a Federally-Insured Bank; FHLB of San Francisco Was Quietly Bailing It Out

By Pam Martens and Russ Martens: March 13, 2023 ~ If you want to genuinely understand why Silicon Valley Bank (SVB) failed and why Jerome Powell’s Fed led the effort yesterday to make sure $150 billion of the bank’s uninsured depositors’ money would be treated as FDIC insured and available today, you need to take a look at how the bank defined itself right up until it blew up on Friday. (That history is still available at the Internet Archives’ Wayback Machine at this link. Give the page time to load.) This was a financial institution deployed to facilitate the goals of powerful venture capital and private equity operators, by financing tech and pharmaceutical startups until they could raise millions or billions of dollars in a Wall Street Initial Public Offering (IPO). The bank was also involved in managing the wealth of those startup millionaires or billionaires once they struck it … Continue reading

Bank Stocks Plummet as Bank Runs in the U.S. Gain Momentum at Federally-Insured, Non-Traditional Banks

Frightened Wall Street Trader

Editor’s Update: California state regulators shut down Silicon Valley Bank during market hours on Friday, creating mayhem in the stock market’s banking sector. The Federal Deposit Insurance Corporation (FDIC) has been appointed the receiver at the bank. The FDIC issued a statement on Friday indicating that only insured depositors (those with $250,000 or less at the bank) will have full access to their money by Monday. As of December 31, Silicon Valley Bank had $209 billion in assets and $175 billion in total deposits, making it the second largest bank failure in U.S. history, after Washington Mutual which failed in September 2008 during the Wall Street financial crisis. Tragically, according to SEC filings, more than $150 billion of Silicon Valley Bank’s deposits were uninsured, leaving hundreds of the tech startup companies it served unsure of how to make payroll next week. By Pam Martens and Russ Martens: March 10, 2023 ~ … Continue reading