Pam Martens and Russ Martens: October 19, 2021 ~
On October 13, Wall Street On Parade broke the story that the Federal Reserve had quietly released the names of the mega banks that had grabbed tens of billions of dollars of repo loans under the Fed’s emergency repo loan operations that began on September 17, 2019 – months before there was a COVID-19 case in the United States or anywhere else in the world.
Repos (repurchase agreements) are a short-term form of borrowing where corporations, banks, securities firms and money market mutual funds secure loans from each other by providing safe forms of collateral such as Treasury securities. Repos are supposed to function without the assistance of the Federal Reserve. But on September 17, 2019, the oversized demand for the repos and the lack of available funds to meet the demand drove the overnight interest rate on repo loans to an unprecedented 10 percent at one point. Typically, the overnight repo rate trades in line with the Federal Funds rate, which was at that time targeted at 2 to 2.25 percent by the Fed.
The newly released data from the Fed showed that three of the largest borrowers during the repo crisis of September 2019 were the trading units of Nomura (a Japanese firm), Goldman Sachs and JPMorgan. The Fed had been heavily criticized after a government audit of its secret loans during the 2008 financial crisis revealed that tens of billions of dollars went to foreign banks. Why was a Japanese firm at the top of the list this time around? Why were U.S. mega banks Goldman Sachs and JPMorgan on the list at all? Fed Chair Jerome Powell had consistently testified to Congress that these banks, which the Fed supervises, were well capitalized and a “source of strength” heading into the pandemic.
There had been major speculation by corporate media in the fall of 2019 when the Fed launched these emergency repo loans as to which financial institutions might be in trouble. One would have thought that the same corporate media would have been anxious to learn the names of the banks that borrowed and share the breaking news with their readers. Imagine our surprise when the story was censored by every major business media outlet.
On Friday, we emailed the business editors of the Wall Street Journal and New York Times, asking why they would fail to publish such an important story. We gave them more than 48 hours to respond. There was no response.
This latest censorship is part of a pattern. Just yesterday, the fearless Robert Kuttner at American Prospect broke the story that Fed Chair “Jerome Powell Sold More Than a Million Dollars of Stock as the Market Was Tanking.” While other media outlets like Yahoo! Finance, Fox Business, the Daily Beast, and Seeking Alpha headlined the story from American Prospect, the Wall Street Journal mentioned the breaking news in the 15th paragraph of a story that carried a headline about Senator Elizabeth Warren and the Fed. The New York Times didn’t run the breaking news at all.
Kuttner wrote this in his analysis of how a “collusive press” covers the Fed:
“The document showing Powell’s October 1 stock sale is public record. In the course of researching my piece, I quickly became aware that other reporters from mainstream media were sniffing around this story. The fact that it took the Prospect to break it speaks volumes about the cozy collusion between Powell and the beat reporters who regularly cover him.”
We witnessed this same type of censorship in April 2019 when the public interest group, Better Markets, published an in-depth report on “Wall Street’s Six Biggest Bailed-Out Banks: Their RAP Sheets & Their Ongoing Crime Spree.” Each of these mega bank holding companies is supervised by the Fed. Failing to report this important news provided more cover for the Fed as a failed supervisor of these banks. We wrote the following three days after the Better Markets study was released:
“We checked the Wall Street Journal, the New York Times, Financial Times, Bloomberg News, Reuters, CNBC, and CNN. We could find no mention of the Better Markets report. (We checked again this morning. There is still a news blackout.)
“We know that the Wall Street Journal was aware of the report because Lalita Clozel, a banking regulation reporter for the Wall Street Journal, Tweeted on April 10 that Democrats in the House Financial Services Committee room were handing out the report to journalists while the Chair of the Committee, Congresswoman Maxine Waters, was introducing the bank CEOs.
“There are four words in this outstanding report from Better Markets that rendered it unpalatable to corporate business media: ‘rap sheets’ and ‘criminal enterprise.’ We searched Bloomberg News, the Wall Street Journal and the New York Times back to 2004 to see if at any time they had used the words ‘rap sheet’ to describe the unprecedented serial crime sprees of these Wall Street mega banks. They had not.”
At the New York Times, the censorship includes failing to correct brazenly erroneous reporting by a Wall Street reporter. On May 12, 2012, Andrew Ross Sorkin of the New York Times wrote one of the most factually-challenged articles we have ever read in a major U.S. newspaper. Sorkin attempted to rewrite the facts of the 2008 financial crisis and knock down efforts at the time by Senator Elizabeth Warren to restore the Glass-Steagall Act, which would have broken up the Wall Street mega banks that are supervised by the Fed. Wall Street On Parade wrote to the New York Times’ Public Editor, the Managing Editor, and the Publisher of the New York Times to correct Sorkin’s grossly erroneous report. Nothing has been corrected to this day. What happened instead was the New York Times ceased having a Public Editor to investigate complaints from the public. (Read our report on the New York Times shilling for Wall Street and the Fed here.)