By Pam Martens and Russ Martens: May 21, 2019 ~
In March of 2016, the Wall Street Journal’s Emily Glazer reported that clients of JPMorgan Chase’s Private Bank “will be required to have at least $10 million in investible assets, twice the current minimum of $5 million.”
What smells like real money to Goldman Sachs has also been eight-figures and higher. In 2013, the New York Times reported that Goldman had a $10 million minimum to manage private wealth and was booting out its own employees’ accounts if they were less than $1 million.
High net worth individuals are what each of the mega Wall Street banks look for since the more money the bank invests, the more fees it generates and the fatter its bonuses are to its traders and executives. And the super rich do not want to be seen coming through the same doors to invest with the main street common folks.
For more than a century, it has been something of a sacrosanct oath for JPMorgan and Goldman to keep out the hoi polloi. When Nomi Prins, the prolific author and former Managing Director of Goldman Sachs penned her 2004 book, Other People’s Money: The Corporate Mugging of America, she wrote that Goldman was “too conceited to have its name or logo visible from the sidewalk of its 85 Broad Street headquarters.”
When Goldman Sachs was negotiating its deal with New York City in 2005 to build its new headquarters building at 200 West Street, one of its requirements was that it have a seat along with the New York City Police Department in a taxpayer-funded spy center to keep the Main Street riffraff under surveillance. Goldman wanted the new surveillance center to be in place no later than December 31, 2009. Curious, isn’t it, that Goldman was prescient enough to think that the pitchforks might be coming out after an epic crash on Wall Street. The spy center was, indeed, built and both Goldman and JPMorgan Chase were given seats, along with the New York Fed, Citigroup and others. (See Wall Street Firms Spy On Protesters in Tax-Funded Center and 60 Minutes Takes a Pass on Wall Street’s Secret Spy Center.)
Now, all of a sudden, Goldman Sachs Bank USA is offering FDIC insured savings accounts with no minimums to the little guy and JPMorgan Chase is frying the brains of its legions of upscale brand marketing gurus with an account that promises “100+ commission-free online stock and ETF trades with $0 minimum to start.” After the little guy has exhausted his 100 free trades, the cost will be $2.95 per trade thereafter, according to the firm’s website.
What could account for this sudden noblesse oblige from the pair of serial miscreants, both of whom have paid monster fines for ripping off the common folk while they took huge secret bailouts from the Federal Reserve.
JPMorgan Chase operates two Dark Pools that are, effectively, unregulated stock exchanges that operate inside the bowels of the bank in darkness. JPMorgan may be attempting to attract some dumb money to trade against and for its hedge fund clients to trade against.
Following the 1929 stock market crash, which resembles 2008 in so many ways, the U.S. Senate Banking Committee conducted an extensive investigation over a period of three years into the trading practices on Wall Street. It found unprecedented amounts of brazen collusion between the largest Wall Street banks. The Senate investigations focused extensively on the operations of “Pools,” today reincarnated as Dark Pools. The Senate Committee wrote as follows:
“A pool, according to stock exchange officials, is an agreement between several people, usually more than three, to actively trade in a single security. The investigation has shown that the purpose of a pool generally is to raise the price of a security by concerted activity on the part of the pool members, and thereby to enable them to unload their holdings at a profit upon the public attracted by the activity or by information disseminated about the stock. Pool operations for such a purpose are incompatible with the maintenance of a free and uncontrolled market.”
The Committee of 1934 concluded as follows:
“The conclusion is inescapable that members of the organized exchanges who had a participation in or managed pools, while simultaneously acting as brokers for the general public, were representing irreconcilable interests and attempting to discharge conflicting functions. Yet the stock exchange authorities could perceive nothing unethical in this situation.”
Today, the Securities and Exchange Commission (SEC) has taken no action to break up the activities of these Dark Pools or to stop the Wall Street banks from making tens of thousands of trades in their own stock. (See Wall Street Banks Are Trading in Their Own Company’s Stock: How Is This Legal?) Of course, there is also the problem that the Chair of the SEC is Wall Street’s former lawyer. (See SEC Nominee Has Represented 8 of the 10 Largest Wall Street Banks in Past Three Years.)
As for why Goldman Sachs has this sudden interest in helping the little guy, one has to look only at the last trading and derivatives report from the Office of the Comptroller of the Currency (OCC). Goldman Sachs Bank USA is a Federally-insured, deposit-taking bank inside the global trading behemoth. (That dangerous combination now permeates Wall Street thanks to the repeal of the Glass-Steagall Act in 1999.) The OCC report shows that this bank has $191.5 billion in assets and $40.3 trillion notional (face amount) in derivatives. The OCC puts Goldman Sachs Bank USA’s “Total Credit Exposure to Capital” at a stunning 354 percent. (See Table 4 in the Appendix here.) That compares to Wells Fargo Bank’s “Total Credit Exposure to Capital” of 26 percent. (And yet Congress has hauled Wells Fargo into hearings repeatedly while ignoring this massive risk lurking at Goldman Sachs.)
Obviously, Goldman Sachs Bank USA could use more capital and more deposits. And, that just happens to be the unit of Goldman that is offering these no minimum savings accounts. What could possibly go wrong?
Goldman Sachs was also offering a so-called great deal in the lead up to the epic stock market crash of 1929. The investment bank ran the Goldman Sachs Trading Company, a closed end fund that was called a “trust” in those days. Goldman offered shares in the trust to the little guy at $104 a share. The fund appeared to investigators to be a dumping ground for Goldman’s unwanted “assets” while also paying it a hefty management fee. The little guy who bought the shares at $104 a share at the top of the bull market was left with a dollar and change after the 1929 crash.
Think caveat emptor when it comes to giving your money to JPMorgan Chase and Goldman Sachs.