Search Results for: repo 2019

By Pam Martens and Russ Martens: November 30, 2023 ~ The Office of Financial Research (OFR) is a unit of the U.S. Treasury Department. OFR was created as part of the Dodd-Frank financial reform legislation of 2010 to keep the Financial Stability Oversight Council (F-SOC) informed about emerging threats that have the potential to spread contagion throughout the U.S. financial system — as occurred in 2008 in the worst financial crash since the Great Depression. Janet Yellen, the U.S. Treasury Secretary, chairs F-SOC. Its members include the heads of every federal banking and Wall Street regulator, who meet regularly to assess any threats on the horizon that could lead to financial instability in the U.S. One of the data charts that OFR makes available both to F-SOC and the public to assess accelerating financial problems is its Financial Stress Index. OFR describes that index as follows: “The OFR Financial Stress Index … Continue reading →

By Pam Martens and Russ Martens: July 7, 2022 ~ The Office of Financial Research (OFR), a unit of the U.S. Treasury Department, was created under the Dodd-Frank financial reform legislation of 2010. Its job is to prevent, through early warnings, the kind of catastrophic financial crisis that occurred in 2008 when irresponsible and corrupt practices on Wall Street toppled the U.S. economy; brought on the deepest financial crisis since the Great Depression; and left the taxpayer and Fed bailing out the Wall Street megabanks that would have otherwise collapsed from their own hubris. Unfortunately, the OFR was savagely gutted under the Trump administration. Today, OFR is like the cop on the beat that has been stripped of his whistle, his walkie-talkie and is wearing dark sun glasses on a cloudy day. One of the tools that the OFR is supposed to use to warn federal regulators that Wall Street is … Continue reading →

By Pam Martens and Russ Martens: February 3, 2022 ~ New details have emerged to provide a fuller picture of the turmoil that was taking place in the dark corners of markets when the overnight repo market blew up on September 17, 2019 and the Fed had to run to the rescue with trillions of dollars in cumulative loans that went on for months. Imagine if you were the Federal Reserve and had been thoroughly disgraced by waging more than a two-year court battle to prevent the press in America from doing its job and publishing the granular details of the Fed’s 2007 to 2010 bailout of Wall Street and its foreign bank derivative counterparties. Then the Fed was further disgraced after losing the court battles when in 2011 the details of the $29 trillion bailout were published. Chances are that the Fed would not be anxious to let the public … Continue reading →

By Pam Martens and Russ Martens: January 19, 2022 ~ There are numerous reasons that members of Congress, bank regulators, and mainstream media don’t want to talk about the repo blowup in 2019 and the massive Fed bailout that followed. Economist Michael Hudson previously explained how the Fed lacked authority to bail out a handful of trading houses on Wall Street under the dictates of the Dodd-Frank financial reform legislation. Dodd-Frank restricted the Fed to using its emergency lending powers to rescue a “broad base” of the U.S. financial system. As we detailed on Monday, there was no “broad base” of the U.S. financial system being bailed out by the Fed in the last quarter of 2019: 62 percent of a cumulative $19.87 trillion in rolled-over repo loans went to just six trading houses: Nomura Securities International ($3.7 trillion); J.P. Morgan Securities ($2.59 trillion); Goldman Sachs ($1.67 trillion); Barclays Capital ($1.48 … Continue reading →

By Pam Martens and Russ Martens: January 17, 2022 ~ The Dodd-Frank financial reform legislation of 2010 ordered the Government Accountability Office (GAO), an investigative body for Congress, to audit the Fed’s alphabet soup of emergency lending programs conducted during and after the 2008 financial crisis. The GAO found that a cumulative $16.1 trillion had been pumped out to Wall Street firms by the Fed – at super cheap interest rates. The GAO provided data for the peak amounts outstanding and also a cumulative total. Why is a cumulative total essential and relevant? Because one institution in 2008, Citigroup, was insolvent for much of the time the Fed was flooding it with cheap loans. (Under law, the Fed is not allowed to make loans to an insolvent institution.) And when an insolvent institution is getting loans rolled over and over by the Fed for a span of two and a half … Continue reading →

By Pam Martens and Russ Martens: January 13, 2022 ~ On September 16, 2019, exactly one day before the Federal Reserve would embark on its first emergency repo loan operations since the financial crisis of 2008, $2.7 billion in credit default swaps (CDS) on a single name blew up. The dealers in those credit default swaps were the very same trading houses on Wall Street that sought, and received, tens of billions of dollars in repo loans from the Fed in an operation that grew to a cumulative $11.23 trillion before its conclusion on July 2, 2020. (In just the last quarter of 2019, the Fed pumped a cumulative $4.5 trillion in repo loans into Wall Street’s trading houses, according to the transaction data it released on December 30 of last year. That was before even one case of COVID-19 had been reported in the U.S.) On September 16, 2019 the … Continue reading →

By Pam Martens and Russ Martens: January 7, 2022 ~ Nine days ago the Fed released the names of the Wall Street trading houses that had borrowed a cumulative total of $4.5 trillion in emergency repo loans from the Fed during just the last quarter of 2019. From September 17, 2019 through July 2, 2020, the same banks had borrowed a cumulative total of $11.23 trillion. The Fed is slowly doling out the names of the banks and the specific amounts borrowed on a quarterly basis, after eight quarters of time has elapsed. The Fed is only releasing the information because the Dodd-Frank financial reform legislation of 2010 made it a legal obligation of the Fed to do so. The Fed had fought a multi-year court battle with the press after the 2008 financial crisis to keep its secret bailouts to Wall Street firms hidden from the American people. Strange as … Continue reading →

By Pam Martens and Russ Martens: December 31, 2021 ~ Jamie Dimon, Chairman and CEO of JPMorgan Chase, likes to perpetually brag about his bank’s “fortress balance sheet.” But in the fall of 2019, that fortress needed to borrow huge sums of money from the Federal Reserve – for still unexplained reasons. The trading units of other Wall Street banks also borrowed large sums from the Fed but they haven’t branded themselves as the “fortress balance sheet.” Yesterday, the Federal Reserve Bank of New York released the names of the banks and the dollar amounts that were borrowed under its emergency repo loan operations for the last quarter of 2019. It had previously released the data for the period of September 17, 2019 through September 30, 2019. The Fed has yet to release the data for the emergency repo loan operations in 2020. Repo loans, short for repurchase agreements, are supposed … Continue reading →

By Pam Martens and Russ Martens: December 29, 2021 ~ The conventional wisdom is that the Fed’s recent emergency lending facilities to Wall Street were caused by the COVID-19 crisis. The above chart, which uses the New York Fed’s own Excel spreadsheet repo loan data, shows the conventional wisdom is dangerously wrong. In the last quarter of 2019 – before there was any news of COVID-19 in the U.S., and months before the World Health Organization declared COVID-19 a pandemic – the Fed pumped $4.5 trillion in cumulative repo loans to unnamed trading houses on Wall Street – its so-called “primary dealers.” The collateral that the Fed accepted for the cumulative $4.5 trillion in loans consisted of $3.497 trillion in U.S. Treasury securities; $988.3 billion in agency Mortgage-Backed Securities (MBS); and $15.839 billion in agency debt. The Fed’s emergency repo loan operations began on September 17, 2019. From September 17, 2019 … Continue reading →

By Pam Martens and Russ Martens: October 13, 2021 ~ The Federal Reserve Bank of New York has quietly posted the names of the banks that grabbed billions of dollars under the Fed’s emergency repo loan operations that commenced on September 17, 2019 – months before there was a COVID-19 crisis anywhere in the world. The emergency repo loans were made via Open Market operations at the New York Fed. Under the Dodd-Frank financial reform legislation of 2010, the names of the banks, dollar amounts borrowed, interest rate and collateral posted must be made public “on the last day of the eighth calendar quarter following the calendar quarter in which the covered transaction was conducted.” Since the emergency repo loans were initiated in the third quarter of 2019, that meant eight quarters had passed and the public was entitled to the information for at least the month of September 2019. (The Fed … Continue reading →