By Pam Martens and Russ Martens: September 26, 2019 ~
Editor’s Note: We have a news flash for our reporting colleagues at mainstream media – you are missing high drama and great quotes by failing to cover the Wall Street-related hearings being held regularly by the House Financial Services Committee. This Committee is dead serious about holding Federal regulators and Wall Street banks’ collective feet to the fire.
After more than 30 years of watching congressional hearings covering Wall Street, we have to commend the Chair of this Committee, Maxine Waters, and the individual Congressmen and Congresswomen who serve on this Committee for their outstanding knowledge of how Wall Street has erected an elaborate and highly efficient wealth transfer system from the poor and middle class of America to the pockets of the one percent.
On Tuesday, September 24, 2019, the U.S. House of Representatives’ Financial Services Committee, chaired by Congresswoman Maxine Waters, held a hearing with all five members of the Securities and Exchange Commission – the first time this has happened since 2007. One of the Commissioners is Hester Peirce, whom we described as a “Koch Fronted Regulatory Hit Woman” in an article we penned on March 17, 2016. She hasn’t disappointed.
Congresswoman Katie Porter of California, never dull and always brilliant (she’s a tenured law professor) subjected Peirce to a public shaming over her caustic remarks on ESG disclosures by corporations. (ESG is an acronym for environmental, social and governance.) Porter quoted Peirce as stating about ESG disclosures that “We ought to be wary of shrill cries from a crowd of self-appointed, self-righteous authorities, even when all they are crying for is the label.” Porter also said Peirce had told an audience that ESG really stands for “enabling shareholder graft,” meaning it allows shareholders to extort companies over environmental, social or governance issues. (See the full exchange at 3:25:45 on the video of the full hearing below.)
Congressman Bill Foster of Illinois did an excellent job questioning SEC Chair Jay Clayton (who had been outside counsel for 8 out of 10 of the largest Wall Street banks prior to coming to the SEC) over the lack of progress at the SEC on the Consolidated Audit Trail or CAT. Foster explained that without one ID that identifies a Wall Street bank or trading firm, whether it is trading in the U.S. or from a foreign trading desk, there is no way to clearly see the source of market manipulations. (As we reported in June, Goldman Sachs is trading in its own secretive Dark Pools on four continents.) Clayton danced around the fact that the CAT has still not come to fruition under his tenure at the SEC.
Congresswoman Ayanna Pressley of Massachusetts questioned Clayton on the plan by some Republican members of Congress to gut the average American stockholder’s ability to bring a shareholder resolution to a publicly traded company. Currently the threshold is that the shareholder own $2,000 worth of the company’s stock. Under one of the plans being floated, a 1 percent share ownership, the shareholder would need to own $3 billion of General Motors stock to bring a shareholder resolution, Pressley explained. Clayton said $3 billion was too much but he wouldn’t commit to what level he thought was appropriate.
Congressman Bill Posey of Florida was particularly harsh with Clayton’s bobbing and weaving tactics on the subject of the contemptible treatment that the victims of Allen Stanford’s Ponzi scheme have received. According to Posey, 21,000 victims of Stanford lost over $5 billion but have received only 4-1/2 cents on the dollar in restitution. The Stanford Ponzi scheme collapsed and Stanford was arrested over a decade ago. According to Posey, the receiver has recovered just $750 million of the $5 billion and half of that amount has gone to the receiver and his team in compensation. Even worse, said Posey, the receiver recently used his authority to bar individual investor claims against the banks that potentially aided and abetted Stanford.
Clayton gave his typical dodgy answers to Congressman Posey, saying regarding the bar against claims on the banks that “minds can differ.” Clayton incensed the Congressman with the response that he had been “fully briefed on this issue.” Posey responded with this: “Do I have the understanding that you’re going to do more than observe it. Do you plan any engagement; do you foresee any engagement; do you foresee the calvalry coming to help the victims?”
Clayton gave his typical non-committal response: “I am looking for any opportunity to help the victims get money back faster.”
Numerous questions also arose throughout the hearing regarding what the SEC is doing about Facebook’s plan to create a cryptocurrency called Libra. Congressman Brad Sherman of California said that Facebook CEO, Mark Zuckerberg, “has a lot of money but he doesn’t have the power to print money. He will have that power if Libra fulfills all of its expectations.” Sherman calls Libra the “Zuck Buck.” Maxine Waters was also highly critical of Facebook’s plan.