Category Archives: Uncategorized

By Pam Martens: June 27, 2013  Former Federal Deposit Insurance Corporation Chair, Sheila Bair, was watching the clock on the wall yesterday during her questioning by the House Financial Services Committee on whether the Dodd-Frank financial reform legislation can stop another taxpayer bailout of too-big-to-fail banks.  In the midst of the hearing, it was announced that Bair would have to depart at 12 noon. Based on the answers coming from Bair versus the three other witnesses, there was the impression that Bair wanted to beat a hasty retreat to lunch.  The problem comes down to this: Bair and many on the Democrats’ side of the aisle, refuse to acknowledge that their much ballyhooed financial reform legislation passed in July 2010, the  Dodd–Frank Wall Street Reform and Consumer Protection Act, is an utter failure in reining in the abuses of the Wall Street behemoths as well as useless in preventing another … Continue reading →

By Pam Martens: June 26, 2013  The U.S. House of Representatives’ Financial Services Committee will convene at 10 a.m. this morning to hear new warnings about the growing dangers posed by the too big to fail Wall Street banks.  On deck to testify are: Thomas Hoenig, Vice Chairman of the Federal Deposit Insurance Corporation (FDIC); Richard W. Fisher, President of the Federal Reserve Bank of Dallas; Jeffrey Lacker, President of the Federal Reserve Bank of Richmond; and Sheila Bair, former Chair of the FDIC, now with the Pew Charitable Trust. (Bair wrote the quintessential insider’s account of the 2008 crash, Bull by the Horns.)   Tragically, these individuals spent hours writing their testimony with the full knowledge that it will far on the deaf ears of a Congress that is incapable of seeing a train wreck coming down the tracks until the mangled cars lie scattered over the landscape.  Here’s a … Continue reading →

By Pam Martens: June 25, 2013  The frightening “L” word is now making the rounds on Wall Street, resurrecting fears of the early days of the 2008 financial crisis. According to Wall Street veterans, liquidity has dried up in finding buyers for what hedge funds are desperate to sell: large blocks of lower rated bonds.  Since Federal Reserve Chairman Ben Bernanke held his press conference on Wednesday, June 19, of last week, hedge funds have been stampeding to unwind trades, driving down the value of not just bonds, but stocks, exchange-traded funds (ETFs) and gold as well. Even U.S. Treasury notes, the typical safe haven amidst panic selling, have lost significant value. The Treasury selloff is likely a result of the liquidity of the instrument; when hedge funds must raise cash quickly to meet margin calls and there are no bids for some of their other asset holdings, they have no … Continue reading →

By Pam Martens: June 23, 2013  Three well known figures on Wall Street find themselves entangled in NYU’s mortgage-gate, exactly one decade after their roles were scrutinized in the biggest New York Stock Exchange scandal since the Senate hearings of the early 1930s exposed the shady dealings of its members.  In 2003, Wall Street super-lawyer, Martin Lipton, was advising his friend, Richard (Dick) Grasso, CEO of the New York Stock Exchange, on a massive compensation plan while simultaneously serving as counsel to the Stock Exchange’s committee on governance and as Chairman of its Legal Advisory Committee.  Joining Lipton in the unpleasant public spotlight was Kenneth Langone, Chair of the Exchange’s Compensation Committee, which had awarded Grasso $130 million in compensation and benefits for the three-year period of 2000 through 2002. That sum represented 99 percent of the Exchange’s net income for those three years according to then New York State … Continue reading →

By Pam Martens: June 21, 2013  In the past two trading sessions, Wednesday and Thursday of this week, the Dow Jones Industrial Average has shaved 550 points out of investors’ pockets. Mainstream media is in lock-step agreement that the decline is owing to fears of slowing growth in China and the potential for the Federal Reserve to “taper,” or retrench from buying $85 billion a month in mortgage-backed securities and U.S. Treasuries. To borrow a phrase from H.L. Mencken, “When you hear somebody say ‘this is not about money,’ it’s about money.”  There’s an old expression on Wall Street: bull markets eventually crumble under their own weight. That’s because, at some point, the value of the market is too big to drive higher. It has only one direction in which it can move and that’s down. It’s about money.  According to the World Bank, the total value (or market capitalization) … Continue reading →

By Pam Martens: June 20, 2013  For the past two days, some of the priciest media real estate in America has been obsessing over the new signature that Jack Lew, the U.S. Treasury Secretary, is sporting on the nation’s currency. No less than the Washington Post, Los Angeles Times, New York Daily News, CBS News and numerous other media outlets devoted space to this trivia about Lew’s squiggly signature getting a makeover.  While this non-story was playing out, AlterNet and Wall Street On Parade co-published an investigation of New York University, where Lew served as Executive Vice President and Chief Operating Officer from 2001 to June of 2006. The New York Times printed a similar investigation on its front page yesterday.  Both investigations showed that in addition to questionable mortgage financing of primary residences for faculty, NYU was financing lavish vacation homes for both administrators and faculty. In some cases, it was … Continue reading →

By Pam Martens: June 19, 2013 In years past, a prominent mutual fund company published an annual chart showing how each of the components of the Dow Jones Industrial Average had performed over the past 70 years versus the performance of its star fund. The chart was buried inside a flashy brochure. Over many years, I studied this chart, double checked it, marveled at it and theorized why there were these fascinating anomalies. I wasn’t curious about the mutual fund, mind you. I was astonished by the vast incongruities in the performance of those 30 stocks. One stock that was always among the top performers was Procter and Gamble. One stock that was always among the bottom performers was IBM. And yet, IBM was the legendary Big Blue; it was revered by millions as the quintessential blue chip stock. Each year I put the new chart in a plastic sleeve and … Continue reading →

 By Pam Martens and Russ Martens: June 17, 2013  A review of deeds and mortgages in some of the toniest towns on the East Coast reveals that not only is New York University financing luxury Manhattan brownstones and high rise condos for its faculty and administrators out of its nonprofit coffers, it has also been secretly financing country homes for a select group. These extravagances have fallen directly on the shoulders of financially struggling students. NYU ranks fourth in Newsweek’s 2012 list of the least affordable colleges.    In September 2009, the New York Times published a remarkable exercise in inanity, profiling John Sexton, President of NYU, relaxing at his Fire Island beach house. Sexton calls his summer getaway a “rather large, wonderful house” in the interview. We learn what Sexton eats for breakfast (black coffee and yogurt), the name of his dog (Legs), how long it takes him to walk … Continue reading →

By Pam Martens: June 17, 2013 (This column, with updates, runs periodically at Wall Street on Parade. Please consider emailing it to friends and family members.) A study conducted by Edward N. Wolff for the Levy Economics Institute of Bard College in March 2010 made the following findings: The richest 1 percent received over one-third of the total gain in marketable wealth over the period from 1983 to 2007. The next 4 percent also received about a third of the total gain and the next 15 percent about a fifth, so that the top quintile collectively accounted for 89 percent of the total growth in wealth, while the bottom 80 percent accounted for 11 percent. Debt was the most evenly distributed component of household wealth, with the bottom 90 percent of households responsible for 73 percent of total indebtedness. Wealth concentration in too few hands while the general populace is … Continue reading →

By Pam Martens: June 14, 2013  MIT’s President is supporting the plan, but it doesn’t take rocket scientists to understand the crisis. On July 1, if Congress does nothing between now and then, the interest rate charged on subsidized Stafford loans to college students will double from 3.4 percent to 6.8 percent.    On May 8 of this year, Senator Elizabeth Warren introduced her first piece of legislation, the Bank on Students Loan Fairness Act, which would allow students to borrow at the same interest rate on their student loans from the government as big banks pay when they borrow from the Federal Reserve’s discount window – a rate currently set at .75 percent. The rate would last for one year to allow Congress to enact a long term solution. Congressman John Tierney introduced a corresponding bill in the House of Representatives.  Fifteen organizations have signed on as supporters to the … Continue reading →