Category Archives: Uncategorized

By Pam Martens and Russ Martens: December 10, 2015 The Office of the Comptroller of the Currency (OCC), which regulates national banks, including the behemoth Wall Street banks that either blew themselves up or became part of shot-gun marriages during the 2008 crash to avoid outright collapse, issued a warning yesterday that credit risks are rising at banks. The rising risks are the result of a loosening of loan underwriting standards, which, says the OCC, “reflects broad trends similar to those experienced from 2005 through 2007, before the most recent financial crisis….” The first question that comes to mind from this report is what good is increased capital at the mega banks if the banks are simultaneously increasing the riskiness of the loans on their books. The next question is why the regulators have sat back and watched this risk grow over the past tumultuous year without nipping it in … Continue reading →

By Pam Martens and Russ Martens: December 9, 2015 Paranoia is rampant among Republicans on the House Financial Services Committee and was on display throughout its hearing yesterday. Unfortunately for the nation, much of that paranoia is well founded. Just take a look at the photo above. The panel of witnesses that testified yesterday represent just eight of the ten voting members of the Financial Stability Oversight Council (FSOC; which is pronounced F-Sock), another layer of oversight imposed by the Dodd-Frank financial reform legislation of 2010 to monitor an ever sprawling octopus of a financial system that looks to most Americans as if it is still out of control, seven long years after the greatest financial collapse since the Great Depression. Behind each of the regulators on the panel (see list and testimony below), with the exception of S. Roy Woodall, the independent member of FSOC with insurance expertise, there … Continue reading →

By Pam Martens and Russ Martens: December 8, 2015  Yesterday, the New York Times gave Presidential candidate Hillary Clinton a free infomercial (a/k/a OpEd) to spin her toothless plan “to rein in Wall Street.” Hillary begins by telling us this: “Seven years ago, the financial crisis sent our economy into a tailspin. Over five million people lost their homes. Nearly nine million lost their jobs. Nearly $13 trillion in household wealth was wiped out.” But that’s not what her husband, former President Bill Clinton told us was going to happen when he repealed the 66-year old Glass-Steagall Act on November 12, 1999. Here’s what Bill Clinton promised us from this massive deregulation of Wall Street: (See video of his full remarks below.) President Bill Clinton: “You heard Senator Gramm characterize this bill as a victory for freedom and free markets. And Congressman LaFalce characterized this bill as a victory for … Continue reading →

By Pam Martens and Russ Martens: December 7, 2015 Last evening, in his speech to the nation from the Oval Office, President Obama reminded Americans that “Muslim Americans are our friends and our neighbors, our co-workers, our sports heroes — and, yes, they are our men and women in uniform who are willing to die in defense of our country.”  In his concluding remarks, the President told viewers that our nation was “founded upon a belief in human dignity — that no matter who you are, or where you come from, or what you look like, or what religion you practice, you are equal in the eyes of God and equal in the eyes of the law.” (See full video of the speech below.) What the President didn’t say is that while the recent mass killing in San Bernardino, California was conducted by a married couple who were Muslim, the … Continue reading →

By Pam Martens and Russ Martens: December 3, 2015  It’s not every day that you wake up to an American newspaper cover like the one shown here from the New York Daily News today. The 96-year old newspaper is expressing its outrage at conservative Republicans who repeatedly invoke God and prayer following mass shootings instead of standing up to the National Rifle Association (NRA) and outlawing assault rifles and high-capacity magazines like the ones used yesterday at a county facility in San Bernardino, California where 14 people were killed and 17 injured. According to the newspaper, the U.S. is “now populated with more firearms than people” and has experienced “355 mass shootings so far this year” – more than the number of days elapsed. Today’s editorial at the New York Daily News explains the simmering anger that was expressed earlier yesterday in other publications and across Twitter after conservative Republican … Continue reading →

By Pam Martens and Russ Martens: December 2, 2015 There are three major red flags waving in the wind over the U.S. junk bond market. First, the market is now approximately $1.8 trillion, about double the amount of junk bonds outstanding at the height of the financial crisis in 2008. Also, yields have skyrocketed, showing a growing aversion to risk by investors. As the above chart indicates, the lowest rated junk bonds (also called “high yield”) which have a CCC or lower rating, have seen their yields double from 8 percent to 16 percent since July of last year. And, finally, downgrades to ratings are swamping the number of upgrades, a telling sign of an overall deteriorating market. According to the ratings agency, Moody’s, the ratio of upgrades to downgrades is at the worst level since the financial crash in 2008-2009. What have junk bond investors gotten in return for … Continue reading →

By Pam Martens and Russ Martens: December 1, 2015 Yesterday, the Federal Reserve Board of Governors voted 5-0 to approve a new rule that was required under the 2010 Dodd-Frank financial reform legislation to rein in the type of vast, secret, and below-market-rate lending the Fed engaged in during the 2007 to 2010 financial crisis. But rather than rein in its hubris, the Fed seems to have gone out of its way to emphasize that it has the power to make loans to “persons,” not just financial firms whose illiquidity might pose a threat to the nation’s overall financial stability. Most Americans understand that the U.S. is experiencing unprecedented wealth inequality and that there are many billionaires in the U.S. whose net worth exceeds that of many regional banks (think Koch brothers or the Walton family behind Walmart). But if individual “persons” should get in a financial bind, is it … Continue reading →

By Pam Martens and Russ Martens: November 30, 2015 The problem with Wall Street is not just that individual participants serially disrespect the law. The bigger problem is that Wall Street as an industry has structured itself as an ingrained law-avoidance system. There’s simply no other industry in America where you could start the sentence – “Wall Street is the only industry in America where…” – and find endless ways to finish that thought. Jamil Nazarali, the head of Citadel Execution Services, the trading arm of a hedge fund and dark pool operator, gave the above sentence a trial run on October 27 at a Securities and Exchange Commission meeting on market structure. Nazarali said: “This industry is the only one that I am aware of where a for-profit public company regulates its customers and competitors. And I understand that you guys think that that’s important but what is it … Continue reading →

By Pam Martens and Russ Martens: November 25, 2015 America’s new gilded age has been lined with Golden Parachutes with pathological underpinnings. On September 11, 2002, the Securities and Exchange Commission brought charges against the three top executives of Tyco International. The complaint began with this: “This is a looting case.” The SEC charged that Tyco’s CEO, Dennis Kozlowski and Mark Schwartz, its CFO, “took hundreds of millions of dollars in secret, unauthorized and improper low interest or interest-free loans and compensation from Tyco.” The transactions were concealed from shareholders and, according to the SEC, “Kozlowski and Swartz later pocketed tens of millions of dollars by causing Tyco to forgive repayment of many of their improper loans” and “engaged in numerous highly profitable related party transactions with Tyco and awarded themselves lavish perquisites — without disclosing either the transactions or perquisites to Tyco shareholders.” USA Today reported that the Manhattan … Continue reading →

By Pam Martens and Russ Martens: November 24, 2015  After lamenting in a recent book how Presidents George W. Bush and Obama didn’t answer his letters (Return to Sender: Unanswered Letters to the President, 2001-2015), Ralph Nader has finally been requited by a powerful person in Washington. Nader had the temerity to write Fed Chair Janet Yellen a letter on October 30, pointing out how the Fed’s zero bound interest rate policy is crimping the spending ability of savers who rely on such things as savings accounts and money market interest for added income to survive. Yesterday, Yellen boldly answered Nader’s letter with a smackdown. The letter has caused an outbreak of sexism charges against Nader by various writers for his suggestion in the letter that Yellen would be wise to “sit down with your Nobel Prize winning husband, economist George Akerlof, who is known to be consumer-sensitive.” Annie Lowrey … Continue reading →