By Pam Martens and Russ Martens: October 21, 2019 ~
This morning the Federal Reserve pumped another $58.15 billion into Wall Street securities firms under the repo loan program it initiated on September 17. That program has been pumping out hundreds of billions of dollars each week to Wall Street with no authorization from Congress, as far as the public is aware.
We decided to take a look at Federal Reserve Chairman Jerome Powell’s daily appointment calendars over the past few months to see if there was any hint of what precipitated the reopening of the Fed’s money spigot to Wall Street for the first time since the financial crisis. We found a very interesting pattern of phone calls and meetings in the month of August.
On Thursday, August 1, Powell had a phone call with JPMorgan Chase’s Chairman and CEO, Jamie Dimon. The call lasted 7 minutes, from 10:30 to 10:37. Just eight minutes after that phone call ended, Powell had a 15 minute phone conversation with Michael Corbat, CEO of Citigroup. The Federal Reserve has a Vice President for Supervision of the big Wall Street banks, Randal Quarles, so it is not clear why Powell was talking to the big Wall Street banks without him on the phone.
On Tuesday, August 13, Powell had breakfast with Howard Adler, the Deputy Assistant Secretary for the Financial Stability Oversight Council (F-SOC). The meeting lasted from 8 a.m. to 8:45 a.m. F-SOC is the federal agency created under the Dodd-Frank financial reform legislation of 2010 to alert the Federal regulators of Wall Street banks when there are looming risks to financial stability on the horizon – ideally in adequate time to prevent a replay of the epic financial crash of 2008 which caught regulators napping.
Just 45 minutes after that meeting ended, Powell had a phone call with Thomas Jordan, the Chairman of the central bank of Switzerland, known as the Swiss National Bank or SNB. The Fed does not provide minutes or notes on what the Fed Chairman’s calls and meetings are about so all we can do is guess as to the topics covered in the phone call, which lasted one-half hour.
Powell’s call with the Chair of the Swiss central bank came 11 days after it reported its stock holdings to the Securities and Exchange Commission (SEC) and that report became public.
The Swiss central bank holds $92.7 billion in stocks, which are predominantly large cap U.S. corporations, according to its SEC filing on August 2 for the period ending June 30, 2019.
What is particularly noteworthy is that the Swiss central bank dumped a lot of U.S. stock shares between its last report on March 31, 2019 and its current report for the quarter ending June 30, 2019. What may have raised eyebrows on Wall Street is the tens of thousands of shares the Swiss national bank sold in the components of the Dow Jones Industrial Average.
For example, SNB dumped 184,200 shares of Procter & Gamble; 477,400 shares of Apple; 341,000 shares of Exxon; 574,000 shares of Intel; 292,000 shares of Johnson & Johnson; 579,200 shares of Microsoft and on and on it went. The selling appeared to be indiscriminate, dumping consumer stable shares like Procter & Gamble, big oil like Exxon, semiconductors like Intel and pretty much anything to do with the big tech names.
The day after Powell had his phone call with the Chair of the Swiss central bank, he met with Brian Moynihan, the Chairman and CEO of Bank of America, which owns the giant stock trading house, Merrill Lynch. That meeting occurred on Wednesday, August 14 from 3:30 to 4:00 p.m. Again, there is no mention that the Fed’s Vice President for Supervision, Quarles, was present at the meeting.
But the following week is when things got really interesting. On Tuesday, August 27, 2019, Fed Chairman Powell sat down for 30 minutes with Lim Chow Kiat, the CEO of the Government of Singapore Investment Corporation, a sovereign wealth fund known as GIC. That’s the same sovereign wealth fund that came to the rescue of Citigroup and UBS at the onset of the financial crisis. GIC invested $14 billion in UBS in December of 2007 and $6.88 billion in Citigroup in January of 2008. Needless to say, the stocks plummeted as the crisis amplified itself during 2008.
Powell did not call or meet with any other foreign central banks during the month of August – not the Bank of England, not the European Central Bank, not the Bank of Japan – just the Swiss central bank.