By Pam Martens and Russ Martens: December 28, 2023 ~
The year 2023 will go down in U.S. banking history as the year in which the fastest bank runs in U.S. history occurred, producing the second, third and fourth largest banking failures in U.S. history in the span of seven weeks. Losses of more than $32 billion from these failed banks hit the Federal Deposit Insurance Fund (FDIC). Adding to the regulatory hubris, the largest and riskiest bank in the U.S., JPMorgan Chase, was allowed by its compromised regulators to become even riskier by gobbling up the failed First Republic Bank while JPMorgan Chase got an unexplained $50 billion 5-year loan from the FDIC at an undisclosed interest rate to sweeten its purchase of the failed bank.
And, what good is a banking crisis if the Fed can’t pony up yet another bank bailout fund, this time with loans of up to an unprecedented one-year term. (Under Federal Reserve statutory legislation, the Federal Reserve Act, the Fed is supposed to make short-term loans. Ignoring statutory legislation has never been a problem at the Fed, however.)
Less than two months after this unprecedented banking chaos occurred, Fed Chair Jerome Powell was back to delivering his Alice in Wonderland narrative to Congress that the “U.S. banking system is sound and resilient.” (If it is so sound and resilient, why does it need so many emergency bailout programs from the Fed?)
Attesting to the systemic nature of the banking crisis, the share prices of the four largest banks in the U.S. began to sell off, with both Bank of America and Wells Fargo losing over 20 percent in the span of three weeks. (See chart below.)
And, of course, one can’t have a real banking crisis without a Global Systemically Important Bank (G-SIB) blowing up. This time it was a Swiss bank, Credit Suisse, with heavy ties to Wall Street mega banks, which might help explain the above chart.
Below, we’ve broken down our major banking and Wall Street corruption stories of 2023 into a few key categories, hoping that our readers will see the overarching reality that corruption has reached unparalleled levels in the U.S. banking system, fueled by its incestuous relationship with Wall Street trading houses and Big Law, while the Criminal Division of the U.S. Department of Justice and Big Media focus on keeping the American people in the dark.
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All Things Crypto
On August 1, 2022, Wall Street On Parade published this headline: Brace Yourself for Federally-Insured Bank Failures Caused by Crypto. By March 8, 2023, the federally-insured crypto-involved bank, Silvergate, blew itself up, and decided to voluntarily wind down. By March 10, 2023 another crypto-involved bank, Signature Bank, had blown up and was put into FDIC receivership. Two days later, the U.S. financial system found itself in the full throes of major bank runs when Silicon Valley Bank collapsed into an FDIC receivership. This collapse was followed by First Republic Bank on May 1.
The criminal trial of crypto kingpin Sam Bankman-Fried would likely be considered by mainstream media as one of the key financial stories of 2023. At Wall Street On Parade, however, where we take a big picture view of the insidious machinations on Wall Street, it was the intimate involvement of Wall Street’s go-to law firm, Sullivan & Cromwell, in the Bankman-Fried and broader crypto matters that caught our eye. See for example:
Two Indicted Masterminds of the FTX Fraud Were Clients of Big Law Firm Sullivan & Cromwell
Sam Bankman-Fried, BlockFi and Sullivan & Cromwell: A Viper’s Nest of Conflicts and Intrigue
Going forward, please notice how rarely the mainstream business press is willing to investigate or even mention a Big Law firm’s nefarious relationships with Wall Street.
For more on our crypto-related coverage, see the following:
Four Crypto-Friendly Banks Are Being Bailed Out with Billions from a Federal Housing Program
Regulators Wake Up to Uninsured Deposits at the Mega Banks
The year 2023 was also the year when federal banking regulators woke up to the frightening reality of how fast bank runs can occur in the digital/social media age. It took only a few social media posts to start an avalanche of digital deposit withdrawals at Silicon Valley Bank. In the span of just 24 hours, $42 billion in deposits had exited the bank with another $100 billion queued up to leave the next day – meaning it was possible for a federally-insured bank to lose 85 percent of its deposits in the span of 48 hours in the digital/social media age. (For a closer look at what was going on at Silicon Valley Bank, see our report: 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.)
In testimony before the House Financial Services Committee on November 15, FDIC Chair Martin Gruenberg cited “over reliance on uninsured deposits” as one of the key factors in the bank failures this past spring. He added this:
“…we are updating examiner guidance to be more explicit about analyses of uninsured deposit concentrations and have reemphasized to examiners the importance of forward–looking indicators of risk, such as high growth rates and breaches of internal risk limits. Additionally, we have strengthened our instructions for examiners on timely escalation of supervisory responses when management has been unable or unwilling to effect corrective action, or when financial conditions deteriorate rapidly, or both….”
Despite this pledge from the FDIC Chair of more attention to “uninsured deposit concentrations,” Wall Street On Parade reported the following:
November 14, 2023: The Deposit Insurance Fund Has a Balance of $117 Billion to Protect Deposits at 4,622 Banks. But One of Those Banks Has $1.4 Trillion in Uninsured Deposits
Former Dallas Fed President Robert Kaplan’s Trading Scandal Remains Behind a Dark Curtain for the Second Year in a Row
The other big story that should have made the front pages of newspapers across America this year was how the investigation of former Dallas Fed President Robert Kaplan (who made million dollar trades in S&P 500 futures while sitting at the helm of the Dallas Fed and being privy to inside information as a voting member of the FOMC in 2020) was resolved by law enforcement. Instead, there was no announcement by law enforcement despite a two-year probe into the matter.
On October 31, 2023, Wall Street On Parade provided an update to our readers. See: After Two Years, There’s Still No Law Enforcement Report on Former Dallas Fed President Robert Kaplan’s Trading Like a Hedge Fund Kingpin.
Kaplan, for his part, appears to be attempting to resuscitate his scandalized reputation with the willing help of Maria Bartiromo and Fox Business news. (See here and here.) Despite Kaplan triggering the biggest trading scandal in the 110-year history of the Fed, he now has the audacity to actually be giving advice to the Fed on how it should conduct its monetary policy.
Wall Street On Parade’s Award for the Slimiest Story of the Year Goes to Jamie Dimon and His Five-Count Felon Bank, JPMorgan Chase
JPMorgan Chase is not just the largest and riskiest bank in the U.S., it is also the most frequently charged with felony counts by the U.S. Department of Justice. (See: JPMorgan’s Board Made Jamie Dimon a Billionaire as the Bank Rigged Markets, Laundered Money, and Admitted to Five Felony Counts.)
Given the bank’s unprecedented rap sheet, that reads more like that of an organized crime family than a federally-insured bank, one would think that the Criminal Division of the U.S. Department of Justice would be all over the bank after the Attorney General of the U.S. Virgin Islands introduces evidence into a federal court that credibly alleges that JPMorgan Chase was “actively participating” in Jeffrey Epstein’s international sex trafficking of minors for more than a decade.
Instead, the bank was allowed to settle the case (and a related case) for $365 million with nary a whimper from Judge Jed Rakoff, despite 17 Attorneys General objecting to the settlement on the basis that it usurped their rights.
The tricked up settlements were the handiwork of another Big Law firm, WilmerHale, which represented JPMorgan Chase.
See part of our coverage below of this unprecedented long-term relationship between the largest federally-insured bank in the United States and the multi-decade sex trafficker Jeffrey Epstein. (Epstein died in a Manhattan jail cell in 2019 while awaiting trial on federal sex trafficking charges. His death was ruled a suicide by the New York City Medical Examiner.)
Janet Yellen’s Treasury Department Hires 5-Count Felon JPMorgan Chase to Look for Fraud
Court Filing: JPMorgan Chase “Actively Participated in Epstein’s Sex-Trafficking Venture”
