Category Archives: Uncategorized

By Pam Martens: January 8, 2013  Monday was settlement day on Wall Street.  The four largest Wall Street banks and a handful of smaller ones tossed $20 billion at their various regulators and slid home free without going to jail over egregious foreclosure abuses that have ravaged the nation and left millions of families in desperate straits.  News of big settlements with Wall Street are typically dumped on Friday to ensure the news is old hat by Monday morning.  But these two big settlements, totaling over $20 billion, came at the beginning of the news week, adding the curiosity element as to why Wall Street actually wanted to create buzz around the settlements.  It didn’t take long to figure that out: the buzz was to help prop up bank shares on the premise that the worst of the past misdeeds are now behind the banks. The regulators eagerly boarded this … Continue reading →

By Pam Martens: January 7, 2013 The insipid regulators of Wall Street’s biggest and most dangerous banks are recklessly caving in to outrageous demands to roll back or water down protections designed to prevent another 2008-style financial collapse.  And the cave-ins are happening in some of the most critical areas of promised financial reform. The latest Wall Street giveaway was announced this past Sunday evening when Mervyn King, Governor of the Bank of England, announced that the new global banking rules on capital adequacy and liquidity, known as Basel III, will not go into effect in January 2015 as promised, but will be phased in over four years and not become fully effective until January 1, 2019.  In addition, the rules themselves have been watered down to allow more risky assets, like mortgage backed securities — which caused many of the problems in 2008 — to count toward emergency liquidity requirements rather … Continue reading →

By Pam Martens: January 4, 2013  According to the Financial Industry Regulatory Authority (FINRA), there are 635,315 licensed securities representatives doling out investment advice throughout the United States.  And yet, according to multiple studies, financial illiteracy continues to reign supreme.  Is there a connection between the fast-talking, jargon-spewing, commission-focused salesmen on Wall Street and the sad state of basic investment knowledge in America?   My personal experience over two decades on Wall Street suggests that the number of licensed representatives who will take the time to educate their clients and play an integral, long-term, supportive role in helping clients build a secure retirement program is the exception – certainly not the rule. The characteristics that Wall Street typically seeks in its brokers were accurately summed up in a 1990s Merrill Lynch training film wherein licensed broker, Michael Stamenson, tells rookie brokers that success requires “the tenacity of a rattlesnake, the heart of … Continue reading →

By Pam Martens: January 3, 2013  In April 2011, the Office of the Comptroller of the Currency (OCC), the top regulator of national banks in the U.S., signed consent orders with 14 of the largest banks and mortgage servicers requiring that they hire “independent” consultants to review 2009 and 2010 foreclosure actions to determine financial injury to borrowers and provide financial compensation for that injury.  Borrowers that suffered injuries were to receive financial awards up to a maximum of $125,000 under these consent orders.  Now, out of the blue, major business media are reporting that this legally adopted plan has been scrapped and a quick fix will soon be announced to fine the whole lot of banks a cumulative $10 billion and call it quits on the investigation.  The first detail you need to know by way of background is that during the relevant foreclosure period of 2009 and 2010, a former bank lobbyist, … Continue reading →

By Pam Martens: January 2, 2013  If the general public knew the history of the company that has announced it is acquiring the New York Stock Exchange, there would be a loud clamor for the anti-trust division of the Justice Department to become involved.  But the larger question is, where has the Justice Department been on this issue for more than a decade?  The company planning to acquire the New York Stock Exchange in an $8.2 billion cash and stock deal is the Atlanta-headquartered Intercontinental Exchange, known on Wall Street simply as ICE.  ICE went public in 2005. There are two paragraphs in its offering statement that are simply breathtaking:  “In May 2000, our company was formed, and Continental Power Exchange, Inc. contributed to us all of its assets, which consisted principally of electronic trading technology, and its liabilities, in return for a minority equity interest in our company. In … Continue reading →

By Pam Martens: December 21, 2012 The Financial Industry Regulatory Authority (FINRA), the self regulatory body that oversees Wall Street firms, has an Investor Education Foundation whose aim is to boost financial literacy and warn folks about investment scams. Earlier this year, FINRA put out an advisory titled: “Weathering Tough Economic Times – 12 Tips for 2012.”  I have to take serious issue with one of their recommendations. Tip number one from FINRA is to set up a rainy day fund: “Set aside at least one month of your current salary (and work your way up to three months) in a federally insured savings account. This will give you a cushion to handle medical bills, a short job loss, a surprise car repair or other financial emergency – and help keep your finances under control.” A backup savings account that will last for three months is more like a brief shower fund … Continue reading →

By Pam Martens: December 20, 2012  It is close to five years since the Commodity Futures Trading Commission referred the Libor rate rigging matter to the U.S. Department of Justice. Yesterday was the first time the Justice Department brought a criminal charge in the matter – not against a U.S. bank where it would have a smoother road to prosecution, but against a Japanese subsidiary of the Swiss banking giant, UBS, and two of its former traders, Tom Hayes and Roger Darin.  The UBS subsidiary has received a deferred prosecution agreement, meaning it won’t be criminally prosecuted if it abides by the terms of the agreement, which includes not disputing the charges and continued cooperation.  UBS paid global fines of $1.5 billion in the matter with the bulk of that money going to the U.S. Department of Justice.  Hayes and Darin have been criminally charged in a complaint filed December … Continue reading →

By Pam Martens: December 19, 2012  UBS, the global banking behemoth based in Switzerland, has agreed to settle charges over rigging the international interest rate benchmark known as Libor with U.K., U.S. and Swiss authorities.  The total settlement with all regulators will total approximately $1.5 billion.  Later this morning, the U.S. Department of Justice and the Commodity Futures Trading Commission, which levied the bulk of the fines, will announce their findings.  The U.K.’s Financial Services Authority (FSA) earlier today revealed the details of an expansive conspiracy to rig rates that involved traders, managers, chat rooms, standing orders, at least 2,000 documented efforts to rig rates, and bribes and payoffs to other brokers.  According to the FSA:  UBS, through four of its traders, colluded with interdealer brokers to attempt to influence the Japanese Libor submissions of other banks. The brokers were in regular contact with various panel banks that contributed Japanese Libor … Continue reading →

By Pam Martens: December 18, 2012  At 9:30 a.m. this morning, the Senate Subcommittee on Securities, Insurance and Investment will hold a hearing on stock market structure, titled: “Computerized Trading Venues: What Should the Rules of the Road Be?”  One of the individuals testifying will be Dan Mathisson, head of U.S. Equity Trading for Credit Suisse.  Mathisson is an influential voice, writing a column for Traders Magazine and cited by Advanced Trading magazine for creating the modern algorithmic trading desk.  According to his prepared written testimony, Mathisson plans to give the Senators an earful on why stock exchanges should be stripped of their status as SROs – Self Regulatory Organizations.  Credit Suisse, for whom Mathisson works, is subject to regulation by the SROs, as are all other broker dealers who are members of exchanges, such as JPMorgan Chase, Citigroup, Morgan Stanley, Merrill Lynch, etc.  Increasingly, the broker dealers see themselves … Continue reading →

By Pam Martens: December 17, 2012  The photograph of the young children being led away from the Newtown, Connecticut elementary school with their eyes closed, hand placed upon the shoulder of the child in front of them, will be seared into our memory banks for the remainder of our lives.  It’s one of those photographs that capture and help to define both America’s history and her future: like the May 4, l970 photograph of the stunned, sobbing female student at Kent State kneeling next to her dead classmate — killed because the Ohio National Guard decided to open fire with live ammunition against students protesting the Vietnam War. Four students died with nine others wounded.  The students were protesting that day because their President, Richard Nixon, had lied to them – he had promised hope and change and an end to the Vietnam War in his election campaign, then escalated the … Continue reading →