Category Archives: Uncategorized

By Pam Martens and Russ Martens: November 24, 2014 Last Friday, the Senate Subcommittee on Financial Institutions and Consumer Protection, chaired by Sherrod Brown, effectively put William Dudley, President of the Federal Reserve Bank of New York, in stocks in the village square and engaged in a rather brilliant style of public shaming. With each well-formed question posed by the panel, Dudley’s jaded leadership of a hubristic regulator came into ever sharper focus. There were a number of elephants in the room during the lengthy session that were only briefly touched upon but deserve greater scrutiny by the press. First, Congress knew that the New York Fed was a failed, crony regulator during the lead up to the financial collapse in 2008, but it granted it an even greater supervisory role under the Dodd-Frank financial reform legislation in 2010. This Congress has also failed to engage in public shaming of … Continue reading →

By Pam Martens and Russ Martens: November 20, 2014 Depending on where and when you got your news yesterday on the tragic death of Shawn D. Miller, a Managing Director of Wall Street mega bank, Citigroup, you were either emphatically told he died of a suicide or you were led to believe he was murdered. By late evening yesterday, the story had disintegrated into wild speculation. The New York Daily News ran this stunning headline, based on anonymous sources, at 9:22 p.m.: “Banker, 42, slashed his own throat in Manhattan bathtub during drug- and booze-filled bender: sources.” It is becoming abundantly clear that if you work for a major Wall Street firm and die a sudden death, it will be shaped, molded, twisted and contorted until it fits with the suicide narrative – no matter how strongly the facts argue otherwise. This is what we can reliably report this morning: … Continue reading →

By Pam Martens: November 19, 2014 Every now and then, someone raises the question of Mafia infiltration on Wall Street or suggests that Wall Street has become an Ivy-league educated, better tailored version of the mob. Now, two lawyers, Helen Davis Chaitman and Lance Gotthoffer have dramatically ratcheted up the debate, suggesting boldly in the latest chapter of their free on-line book that there are stark parallels between the Gambino crime family and JPMorgan Chase – the nation’s largest bank. Writer Matt Taibbi had a similar epiphany back in 2012 in an article for Rolling Stone titled The Scam Wall Street Learned from the Mafia – the story of how major Wall Street firms conspired together to rig bidding in the municipal bond market. Taibbi writes: “In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of … Continue reading →

By Pam Martens: November 18, 2014 For at least the past 20 years, the Government Accountability Office (GAO) has been telling the Securities and Exchange Commission to clean up its act when it comes to the proper handling, collection, disbursement and financial reporting of penalties and disgorgements it is supposed to be collecting from violators of securities laws. Yesterday, the GAO filed yet another report on the subject, this time finding that “during our fiscal year 2014 audit, we identified continuing and new deficiencies in SEC’s internal control over disgorgement and penalty transactions that constituted a significant deficiency in SEC’s internal control over financial reporting.” Unfortunately, the GAO’s own opaque presentation on this subject leaves the public in the dark about just how bad the situation is at the SEC. As part of the SEC’s enforcement responsibilities, ostensibly to catch and punish securities law violators, it is also frequently assigned … Continue reading →

By Pam Martens: November 17, 2014 It’s called the Dracula fraud case against JPMorgan because no matter how many times JPMorgan’s lawyers try to kill it, the case rises up from the dead to find new life. Now, with former JPMorgan insider Alayne Fleischmann revealed by Matt Taibbi in Rolling Stone as someone who has critical firsthand evidence that a jury needs to hear in this case, a potential $1.6 billion jury award against JPMorgan is looking winnable – if the case can ever get in front of a jury. The lawsuit was filed by affiliates of the Belgian-French bank Dexia, which received multiple bailouts by the two governments during the financial crisis. Dexia’s original complaint that was filed on January 19, 2012 in New York State Supreme Court, alleged widespread fraud in the sale of Residential Mortgage Backed Securities (RMBS) by JPMorgan, its direct affiliates and two firms it … Continue reading →

By Pam Martens: November 13, 2014 On November 6, Bloomberg News reporter, Matthew Boesler, set off a flurry of comments with an article headlined: “Fed Concern With Repeat of 1937 Blunder Echoed by Markets.” The reference to 1937 relates to the fact that as the U.S. economy was showing signs of improvement from the conditions of the Great Depression of the 1930s, the Federal government and the Federal Reserve overreacted to inflationary concerns with contractive measures in 1937, sending the economy into a sharp slump in late 1937 and 1938. The chief worrier at the Fed about it making the same mistake today is Charles Evans, President of the Federal Reserve Bank of Chicago. Evans’ background is that of a long-term researcher. Prior to becoming President of the Chicago Fed, he served as its Director of Research, and earlier, its Senior Economist in charge of the Macroeconomics Research Group. In … Continue reading →

By Pam Martens: November 12, 2014 Two U.S. and three foreign banks have been charged with rigging the foreign exchange market where $5.3 trillion changes hands daily and have settled civil claims for $3.3 billion. (The charges are very similar to those in the rigging of the international interest rate benchmark known as Libor.) Additional charges and settlements by other regulators are expected to follow before the end of the year. The U.S.-based Commodity Futures Trading Commission (CFTC) levied a total of over $1.4 billion in fines against JPMorgan, Citigroup, UBS, HSBC and RBS. The same five banks were fined $1.7 billion by the U.K.’s Financial Conduct Authority (FCA). Swiss regulator FINMA charged only UBS with a fine of $139 million and included rigging of precious metals trading along with rigging foreign exchange. While the details that were released are skimpy and the Financial Conduct Authority is already being criticized … Continue reading →

By Pam Martens: November 11, 2014 Apparently, not one of the global regulators pushing the latest plan to prevent another taxpayer bailout of the over-leveraged, globe-trotting banking behemoths that crashed the financial system in 2008 ever worked a day on Wall Street or sat behind a trading terminal during the crisis. If one had, he would have exposed this plan immediately as an exercise in illusory thinking – effectively, the same framework on which global banking currently exists. Yesterday, the Financial Stability Board, established in 2009 to coordinate financial regulatory proposals on behalf of the Group of 20 major economies (G-20), released a proposal that is being promoted as a means of ending taxpayer bailouts of too-big-to-fail banks. These 30 banks are known as G-SIBs, or Global Systemically Important Banks. But the proposal does nothing to address the “systemic” danger of these banks, thus the proposal is nothing more than … Continue reading →

By Pam Martens: November 10, 2014 Two years after attorney Alayne Fleischmann was downsized out of her job as a Transaction Manager at JPMorgan Chase, her boss, William Buell, was hauled before the Financial Crisis Inquiry Commission (FCIC) for interrogation on just how culpable the bank was in packaging and selling toxic mortgage backed securities. Buell is the same man that Fleischmann exposed in a Rolling Stone feature article by Matt Taibbi last week as the recipient of her detailed, internal letter in early 2007, warning him that the mortgage pools her group was reviewing contained poor quality mortgage loans unfit for purchase or securitization. Despite the written warning, Fleischmann would later learn that JPMorgan, in a drive to boost market share and profits, went forward and purchased the pool, securitized many of the loans, then sold them to unsuspecting investors. But when Buell was asked directly during his questioning … Continue reading →

By Pam Martens: November 6, 2014  Remember the Senate hearing on June 18 when Senator Elizabeth Warren talked about the high frequency trading firm, Virtu, reporting in its IPO prospectus that it had been trading for 1,238 days and made money on 1,237 of those days. Last week three futures traders told a Federal court in Chicago that it’s not just the high frequency trading firms that are reaping a windfall but the exchanges who are engaged in a conspiracy with them to create “guaranteed winners and guaranteed losers.” The original lawsuit was filed on April 11 against the CME Group and four of its officials in the U.S. District Court for the Northern District of Illinois. The CME Group owns the Chicago Mercantile Exchange (CME), the largest futures exchange in the world. Terrence (Terry) Duffy, the Executive Chairman and President of the CME Group, a man who has testified … Continue reading →