Category Archives: Uncategorized

By Pam Martens: August 31, 2012 This week Citigroup, the serial settler of lawsuits on the cheap over wrongdoing, agreed to end litigation over its failure to disclose the full scope of its exposure to subprime debt.  The settlement tab — $590 million.  Between 2006 and November 21, 2008, the Friday before “Citigroup Weekend,” when the U.S. government had to step in to save the bank, Citigroup’s market value (the worth of all of its common shares in the marketplace) went from $250 billion to $20.5 billion.  So the harm done to shareholders, in terms of loss of confidence, was more in the range of $229.5 billion, not $590 million. The lead law firm was Kirby McInerney LLP.  It did a masterful job of compiling and exposing the subterfuge and who knew what and when at Citigroup.  We have the Court system to thank for the diminished payout.  Court precedents … Continue reading →

By Pam Martens: August 30, 2012 Shortly after the Occupy Wall Street protests began in lower Manhattan in the Fall of 2011, Naomi Klein published a piece at The Nation, heralding the movement as “the most important thing in the world now.” To the chagrin of Wall Street, Klein succinctly explained to the populace what was coming next from the marauding wealth barbarians unless there was a demonstrative push back from the citizenry: “If there is one thing I know, it is that the 1 percent loves a crisis. When people are panicked and desperate and no one seems to know what to do, that is the ideal time to push through their wish list of pro-corporate policies: privatizing education and social security, slashing public services, getting rid of the last constraints on corporate power. Amidst the economic crisis, this is happening the world over. “And there is only one … Continue reading →

By Pam Martens: August 29, 2012 There really are two kinds of Americans.  One type is of the Ayn Randian persuasion, believing that rapacious capitalism without safety nets is an ideal model for our country.  The other kind believes that our Nation’s children represent the future and each and every one of them – regardless of class, race or social circumstances – deserves a chance at a productive life.  The second kind of American is frequently derided as a soft-hearted liberal sop; but that’s a shallow analysis.  We fail as a country when we fail our children – both morally and in terms of global competitiveness.  This is why the revelations in Neil Barofsky’s new book — Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street – are so disturbing.  Barofsky was the Special Inspector General of the Troubled Asset Relief  Program (TARP), put in charge to monitor … Continue reading →

By Pam Martens: August 28, 2012  When Ron Suskind’s new book, “Confidence Men,” was released last Fall, there was much noise about the jaw-dropping revelation that President Obama told Treasury Secretary Tim Geithner to “wind down” Citigroup and Geithner brazenly disobeyed the President, essentially doing his own thing where Citigroup was concerned.  Here’s a snippet: “In early April, Obama’s economic team congregated in the Oval office for the morning briefing.  All the key players were there, except Geithner.  After a few moments, the president talked about a resolution plan for Citigroup as a key item in his arsenal, and wondered how close it was to completion.  Christina Romer and Larry Summers glanced at each other.  They had been talking for nearly a month about how the Treasury Department seemed to be ignoring the president’s clear, unequivocal orders involving Citigroup. Geithner and his team were moving forward with their own favored … Continue reading →

By Pam Martens: August 27, 2012  If you want to know if the stock market is on solid footing, look at these numbers.  Statistics come from either the Investment Company Institute (ICI) or Morningstar. ICI data references worldwide equity funds; Morningstar references U.S. stock funds.  U.S.-stock funds have shed $214.9 billion overall over the last three years, as of April 30, 2012. (Morningstar) Equity funds worldwide had net outflows of $108 billion in the third quarter of 2011. (ICI)  Equity funds worldwide had net outflows of $70 billion in the fourth quarter of 2011. (ICI)  Equity funds worldwide had net outflows of $8 billion in the first quarter of 2012. (ICI)  U.S. stock outflows were $9.3 billion in April 2012. (Morningstar) Equity funds posted an outflow of $9.77 billion in May 2012. (ICI)  Equity funds posted an outflow of $6.28 billion in June 2012. (ICI)  U.S. stock outflows registered $8.2 billion in July 2012. (Morningstar)  Equity funds … Continue reading →

By Pam Martens: August 25, 2012 If you want a hearty laugh, check out the web page for the SEC’s official whistleblower office.  They’d like us all to know that “Assistance and information from a whistleblower who knows of possible securities law violations can be among the most powerful weapons in the law enforcement arsenal of the Securities and Exchange Commission.” Really? Let’s take a walk down memory lane at what happened to past whistleblowers attempting to promote justice at the SEC. First up is Gary Aguirre, a lawyer and investigator at the SEC who thought the powerful former Morgan Stanley honcho John Mack should receive a subpoena to give testimony about his potential involvement in insider trading. Mack was protected; Aguirre was fired via a phone call while on vacation — just three days after contacting the Office of Special Counsel to discuss the filing of a complaint about the … Continue reading →

By Pam Martens: August 24, 2012  As we’ve mentioned here before, expect to see a lot of anti-consumer news surrounding Wall Street being released in the waning days of August.  Media strategists know two things: drop bombs on Friday so the buzz will hopefully be gone by Monday; or, when possible, wait for the lazy last days of summer when vacations, school shopping, and beach going fill the public’s mind. So it was to be expected that Mary Schapiro, Chair of the SEC, would announce yesterday that she will not proceed with any further reforms on money market funds because “Three Commissioners, constituting a majority of the Commission, have informed me that they will not support a staff proposal to reform the structure of money market funds. The proposed structural reforms were intended to reduce their susceptibility to runs, protect retail investors and lessen the need for future taxpayer bailouts.” If … Continue reading →

By Pam Martens: August 23, 2012  A provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act required that the newly created Consumer Financial Protection Bureau (CFPB) study the use of forced arbitration contracts; not outlaw them, mind you, despite mountainous evidence that they have spawned corporate kangaroo courts; just study them.  Read here and here for an in-depth look at the problem.  At the behest of Wall Street lobbyists, the same tactic was used in Dodd-Frank to deal with the so-called Volcker Rule to rein in abuses by Wall Street firms engaging in proprietary trading for the house – study the issue for years to give Wall Street a free pass to continue ripping the face off the investing public.  The CFPB has posted the comments it received on forced arbitration on their web site.  Along with the usual corporate shills, like the U.S. Chamber of Commerce, there … Continue reading →

By Pam Martens: August 22, 2012 An NBC News/Wall Street Journal poll conducted August 16 – 20 finds that just 12 percent of registered voters approve of the job Congress is doing.  The findings tied with the all time low previously set in October 2008. But the NBC/WSJ poll may even be too generous to Congress.  According to a Gallup poll conducted between February 2 – 5, 2012 and again on August 9 – 12, 2012, just 10 percent of Americans approve of the job Congress is doing.  (The Gallup poll was conducted among a random sampling of adults, not just registered voters as in the NBC/WSJ poll.) The 10 percent approval rating is the lowest number for Congressional approval in the 38 years Gallup has been conducting the poll. The poll findings are compatible with the widespread view by Americans that members of Congress are dependent on corporate money … Continue reading →

By Pam Martens: August 21, 2012  As we look back on the charred remains of Wall Street, it is becoming clear that the full story of its self implosion is based on more than just corruption and over-leveraging. A closer look shows that much of what Wall Street has peddled was based on artificial demand created by its own artifices.  The dot.com bubble could not have happened without the fake research reports Wall Street was pumping out daily, combined with forcing clients to buy at increasing prices (laddering) to get in on hot deals.  The demand for auction rate securities collapsed once it became clear that Wall Street had been propping up that market.  There was no demand for side-stepping the county registry of deeds with Wall Street’s MERS creation.  That artifice was simply to streamline the peddling of collateralized debt obligations (CDOs) to investors who thought they were buying a AAA … Continue reading →