Category Archives: Uncategorized

By Pam Martens: September 24, 2013 Yesterday, the National Credit Union Administration (NCUA) filed suit in U.S. District Court for the District of Kansas against 13 foreign banks and U.S. based JPMorgan Chase, charging the group with violating federal and state anti-trust laws through their manipulation of interest rates in the setting of the London Interbank Offered Rate (LIBOR), a benchmark used to set rates on everything from student loans to interest rate swaps to adjustable rate mortgages. NCUA, the regulator of U.S. credit unions, alleges the defendants conspired to achieve multiple benefits for themselves to the detriment of their customers and investors. According to the complaint, the motives were to suppress LIBOR in order to benefit their trades that were tied to LIBOR, to reduce their borrowing costs, to deceive the market as to the true state of the banks’ creditworthiness, and to deprive their counterparties of the level … Continue reading →

By Pam Martens: September 23, 2013 Richard M. Bowen III wants to leave this country better off than the way he found it for the good of the next generation. So does this public interest web site. So do most Americans. Unfortunately, we all have a serious roadblock: the sealers, redactors, censors and enablers who are keeping Wall Street’s crimes from seeing the light of day in a public courtroom and its criminals from observing the shadows of a darkened cell. Yesterday, journalist William D. Cohan penned an “opinion” piece for the New York Times. (The word “opinion” was likely placed over the fact-intensive article to eliminate the potential for Brad Karp, Citigroup’s serial go-to lawyer for its serial get-out-of-jail free cards, to sue the New York Times.) The thrust of the article is that Brad Karp pressured the Financial Crisis Inquiry Commission, tasked by Congress to get to the bottom … Continue reading →

By Pam Martens: September 19, 2013 JPMorgan has reached a $920 million settlement with four of its regulators over the London Whale matter, a high risk trading strategy where bank deposits were used to gamble in illiquid credit derivatives in London. We now know why JPMorgan has been auditioning the settlement in the press for the past four days: the language in the various settlement documents is harsh, making it crystal clear the company broke both banking law and securities law. But then, the regulators had very little choice; the U.S. Senate’s Permanent Subcommittee on Investigations had effectively already reached those conclusions in a 307-page report it issued on March 14 of this year. The settlement with the Office of the Comptroller of the Currency (OCC) reads: “The credit derivatives trading activity constituted recklessly unsafe and unsound practices, was part of a pattern of misconduct and resulted in more than minimal loss, all within … Continue reading →

By Pam Martens: September 18, 2013 On June 24 of this year, Senator Elizabeth Warren was incensed. She wrote to the Federal Housing Finance Agency (FHFA), the federal regulator of the Federal Home Loan Banks as well as Freddie Mac and Fannie Mae. Warren had just learned that Sallie Mae, a Fortune 500 company engaged in making private student loans, had obtained an $8.5 billion line of credit from a Federal Home Loan Bank. Sallie Mae had been borrowing on its line of credit at 0.23 percent, then making student loans at 25-40 times that rate according to Warren. Warren reminded the federal regulator that “Congress established the Federal Home Loan Bank System to serve as a reliable source of funding to local banks and other community lenders that offer families home mortgages.” Warren cited a report from the Consumer Financial Protection Bureau showing that significant levels of student debt … Continue reading →

By Pam Martens: September 17, 2013 Since last evening, corporate media has been in a fierce competition to spin another toothless settlement on Wall Street as a win for the new tough cop on the beat, Securities and Exchange Commission Chair, Mary Jo White. It takes quite the creative imagination to frame this as anything more than the continuance of Wall Street’s business model of looting billions and paying back millions. Crime is still the best profit center Wall Street has going for it — having thoroughly dissuaded its customers against trusting its advice on investments. According to leaks, the settlement tab to JPMorgan Chase to make most of its civil regulatory problems disappear regarding the London Whale trades will be $700 to $800 million. (There still may be open criminal probes by the U.S. Justice Department and FBI. The Commodity Futures Trading Commission may bring its own civil enforcement action.) … Continue reading →

By Pam Martens and Russ Martens: September 16, 2013 An institutionalized wealth transfer system is playing out at New York University, a nonprofit organization subsidized by the U.S. taxpayer.  Forgivable mortgage loans for multi-million dollar luxury homes have been doled out by NYU to an inner circle of administrators and elite faculty. The University’s President, John Sexton, has received an interest rate of less than one-quarter of one percent from NYU to finance a multi-million dollar beach residence on Fire Island. All this while NYU students carry the greatest burden of debt of any nonprofit university in the country – a figure placed at $659 million in 2010 by the Department of Education and now estimated to be well over $1 billion due to a poorly understood debt compounding trick called “capitalized interest.” While the unconscionable mortgage loans at NYU have received significant press attention and a Congressional probe by … Continue reading →

September 15, 2013 President Obama released the following statement early this evening regarding the decision by Larry Summers to withdraw his name from consideration for Chairman of the Federal Reserve Board of Governors: “Earlier today, I spoke with Larry Summers and accepted his decision to withdraw his name from consideration for Chairman of the Federal Reserve. Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today. I will always be grateful to Larry for his tireless work and service on behalf of his country, and I look forward to continuing to seek his guidance and counsel in the future.”  

By Pam Martens: September 12, 2013 President Obama finished up his August bus tours with speeches to high school and college students on his plans to make college more affordable. The President’s slogan of “college affordability” belies a growing crisis in the U.S. – student loan debt has now eclipsed credit card debt and stands at $1.2 trillion according to the Consumer Financial Protection Bureau (CFPB). The Financial Stability Oversight Council (F-SOC), a unit of the U.S. Treasury, warned in its 2013 annual report that high levels of student debt could have severe negative impacts on the U.S. economy, writing that it could “impact demand for housing, as young borrowers may be less able to access mortgage credit. Student debt levels may also lead to dampened consumption.” According to F-SOC, while household debt in general became more current on payments last year, 11.7 percent of student loans were more than … Continue reading →

By Pam Martens: September 11, 2013 In February of this year, the Consumer Financial Protection Bureau (CFPB), the new Federal agency that Senator Elizabeth Warren fought so hard to create against a tsunami of backlash from Wall Street and Republican ranks, asked the public to comment on making college more affordable and to describe their student loan experiences with private lenders. There was a tidal wave of nearly 30,000 responses. Public interest groups, nonprofit community programs, and thousands of college graduates responded. The most tragic stories came from students who augmented their Federal student loans with loans from the big Wall Street banks like Citibank, a unit of the bailed out poster child for bad behavior, Citigroup. Citibank borrowers tell horror stories of living without heat, living on food donations from friends, and watching their monthly student loan payment skyrocket without warning from $374 to $1025.53. The levels of stress and … Continue reading →

By Pam Martens: September 10, 2013  Citibank, the insured depository bank of the global behemoth, Citigroup, was bailed out by the U.S. taxpayer from 2008 through 2010 with over $2 trillion dollars in equity infusions, asset guarantees and loans of under one percent interest from the Federal Reserve. The far flung financial enterprise was bailed out despite a serial history of abusing its customers – crimes for which its regulators have imposed large fines and little justice. The undisputed reality is that the shareholders of Citigroup would be holding worthless stock today were it not for the company’s rescue by taxpayers during the Wall Street collapse five years ago. And yet, today, based on reports from coast to coast, the company is engaging in egregious abuses of struggling young college graduates who took out private student loans from Citibank. The generosity that the U.S. Congress, and Treasury and Federal Reserve lavished … Continue reading →