Category Archives: Uncategorized

By Pam Martens: July 15, 2013  Last Wednesday, Eric Hunsader, the outspoken executive from data feed company, Nanex, posted a letter at the company’s web site that the big Wall Street law firm, Skadden, Arps, Slate, Meagher & Flom LLP, had filed with the Commodity Futures Trading Commission (CFTC) last December.  The letter was co-signed by Mark D. Young and Jerrold E. Salzman and was addressed to Dan Berkovitz, General Counsel of the CFTC. Skadden demanded answers as to how Section 8 trading data had fallen into the hands of academics not directly employed by the CFTC. (The academics had the temerity to analyze the data as it related to potential market manipulation by high frequency traders and publish the findings for the public at large to scrutinize – a travesty if ever there was one in the eyes of Wall Street.)  As it turns out, Skadden lawyer Mark Young has … Continue reading →

By Pam Martens: July 12, 2013  Wall Street regulators hauled before the Senate Banking panel yesterday were likely expecting compliments for their agreement on forcing big banks to boost capital. Instead, Senator Elizabeth Warren dropped a bombshell: she and three other Senators later yesterday were introducing legislation to restore the depression era Glass-Steagall Act. (The Senate co-sponsors were John McCain, Republican from Arizona, Maria Cantwell, a Washington Democrat, and Angus King, an Independent from Maine.)  As regulators from the Treasury, FDIC, Federal Reserve and Office of the Comptroller of the Currency stared back in silence, Senator Warren mapped out why the legislation was being introduced:  “…the four largest banks are now 30 percent larger than they were just five years ago and they have continued to engage in dangerous, high-risk practices. So, later today Mr. Chairman, Senators McCain, Cantwell, King and I will introduce a 21st Century Glass-Steagall Act. For half a … Continue reading →

By Pam Martens: July 11, 2013  The Federal Reserve used to manage its future monetary policy in bare whispers; under Chairman Ben Bernanke of late, it’s been lightning bolts of declarative statements that send the stock and bond markets careening in one direction and then another.  In June, Bernanke said the Fed might begin later this year to taper downward its monthly purchases of $85 billion of Treasury and mortgage-backed securities, signaling the beginning of the end of cheap money. While Bernanke did at the time mention economic caveats before this tapering would begin, the markets heard only the lightning bolt of an end to easing and sold off in short order.  Bernanke was out on the stump again yesterday, delivering a 4,000-word speech to the National Bureau of Economic Research at the Royal Sonesta Hotel in Cambridge, Massachusetts. This time, Bernanke delivered a history lesson on the Fed and curtailed … Continue reading →

By Pam Martens: July 10, 2013  The Partnership for Civil Justice Fund has filed Freedom of Information Act (FOIA) requests with the National Security Agency (NSA), the Department of Homeland Security (DHS), the Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) to learn further details about the mass surveillance programs exposed by Edward Snowden. The nonprofit organization is demanding to know the scope of the programs, their operating guidelines and procedures, the retention of data collected through such programs, and internal evaluations attempting to justify these programs’ legality and constitutionality.  The FOIA request reads in part: “The people of the United States have an urgent need for disclosure of the requested information regarding what appears to be the largest covert surveillance program directed against them in U.S. history. The U.S. government and its agencies that are carrying out these unprecedented surveillance programs are not entitled to hide these … Continue reading →

By Pam Martens: July 9, 2013 According to a report out of London this morning, the New York Stock Exchange (NYSE/Euronext) has been selected from a number of bidders to take over administration of Libor, the now discredited, rigged interest rate benchmark that had been previously overseen by the British Bankers Association, a lobbying organization for banks. The idea that turning over the administration of Libor to the NYSE, whose major shareholders include some of the Wall Street firms currently under investigation for rigging Libor, would restore confidence in using Libor as an interest rate benchmark is…well…typical of Wall Street’s irrational thinking. According to a March 31, 2013 report from Morningstar, the following Wall Street firms are among the major shareholders of NYSE/Euronext: Citigroup,  6.5 million shares; Morgan Stanley, 5.9 million shares; JPMorgan Asset Management (UK) Ltd., 4.9 million shares; Merrill Lynch & Co. Inc., 4.2 million shares; Deutsche Bank … Continue reading →

By Pam Martens: July 8, 2013  Senator Charles (Chuck) Schumer of New York is writing letters and pounding the table to try to stop sweeping new regulation of derivatives from being put into effect by the Commodity Futures Trading Commission (CFTC) four days from now on July 12.  Schumer is leading an assault against Gary Gensler, Chair of the CFTC, who wants to impose cross-border rules which would prevent firms like JPMorgan Chase from simply moving its derivative trades to London or another foreign trading venue to escape U.S. rules – the situation that allowed JPMorgan to lose $6.2 billion of deposits in its infamous London Whale derivatives episode.  Schumer’s actions and those of other Senate Democrats who joined with him in a letter to Jack Lew, Treasury Secretary, brought a sharp rebuke last week from the editorial board of the New York Times:  “In the letter to Mr. Lew, the senators … Continue reading →

By Pam Martens: July 3, 2013  The Federal Reserve Board yesterday announced that it had “approved a final rule to help ensure banks maintain strong capital positions,” but it was as clear as mud when or if the new rule would take effect and how it would lessen the risk of the too-big-to-fail banks and prevent another taxpayer bailout of Wall Street. After years of stonewalling on higher capital rules for banks, there was the nagging suspicion that the Federal Reserve decided to talk the talk on tougher standards after the House Financial Services Committee held a hearing last Wednesday that delivered a devastating assessment of how dangerous the largest Wall Street banks remain to the U.S. economy.  Thomas Hoenig, former President of the Federal Reserve Bank of Kansas City and now Vice Chair of the FDIC, reflected the general mood at the hearing when he stated that the biggest … Continue reading →

By Pam Martens: July 2, 2013  In July 2002, less than a year after Congress passed the USA Patriot Act, Nancy Chang, then Senior Litigation Attorney for the Center for Constitutional Rights, published a prophetic and comprehensive book about the legislation titled: Silencing Political Dissent: How Post-September 11 Anti-terrorism Measures Threaten our Civil Liberties.  Chang was one of the early visionaries to see that the USA Patriot Act was not so much about protecting us from terrorists but a weapon to control, contain and criminalize political dissent. I had the privilege of assisting in a New York City book launch event for Chang in September 2002, where Chang warned that the endless war on terrorism theme was critically different from past assaults on Constitutional freedoms during war time. The earlier crises came to an end when the country returned to peacetime. With an endless war mantra, there would be no … Continue reading →

By Pam Martens: July 1, 2013 Yesterday, beginning in the morning, every major online news outlet had a front page article on the breaking story that the NSA had electronically bugged the diplomatic offices of the European Union in Washington, D.C., at the United Nations and in Brussels – every outlet except the paper of record, the New York Times. The news first broke on Saturday at the online site of the German magazine, Der Spiegel, and went viral thereafter. The details of the story came from new documents leaked by Edward Snowden, the former intelligence contractor now sought by the U.S. for extradition and prosecution. Snowden is believed to be in an airport in Moscow while he seeks permanent asylum from Ecuador or another country. On Sunday, as hour after hour went by, as more outrage and invective flowed out of Europe, the story was nonexistent on the Times … Continue reading →

By Pam Martens: June 28, 2013  The day after the U.S. House of Representatives’ Financial Services Committee held a hearing on why their seminal financial reform legislation, Dodd-Frank, is a bureaucratic boondoggle that will not prevent another taxpayer bailout of Wall Street in the event of a systemic collapse, we learn just how vulnerable the system is to powerful men allowed to play with other people’s money.  Yesterday, the Commodity Futures Trading Commission (CFTC) brought charges in Federal Court against MF Global, its former CEO, Jon Corzine, and its former Assistant Treasurer, Edith O’Brien. Corzine is a former U.S. Senator and Governor of New Jersey. The two are charged with the unlawful allocation of customer money at the commodities trading firm. The company has agreed to settle the charges against the firm for $100 million. The claims remain outstanding against the individuals.  MFGlobal collapsed in October 2011. Corzine had directed the … Continue reading →