Category Archives: Uncategorized

By Pam Martens: July 9, 2012 The Mayor of Baltimore, the Baltimore City Council, the City of New Britain Firefighters’ and Police Benefit Fund of Connecticut filed an amended lawsuit on April 30 of this year seeking class action status in Federal Court in New York over the rigging of Libor.  The plaintiffs state that the City of Baltimore purchased hundreds of millions of dollars of derivatives tied to Libor while the New Britain Firefighters and Police Benefit Fund purchased tens of millions.  They are suing the banks involved in submitting Libor rates.  The plaintiffs have submitted to the Court significant background data suggesting that anomalies in other financial measurements show which banks were brazenly lying when submitting their borrowing rates for setting Libor.  One chart stands out in particular.  The following shows the 12-month U.S. Dollar Libor quotes from Citigroup and the Bank of Tokyo, together with the respective bank’s one-year … Continue reading →

By Pam Martens: July 9, 2012 The big money to be made from cheating on Libor was from exchange traded interest rate contracts and over-the-counter interest rate swaps.  According to the Office of the Comptroller of the Currency, as of March 31, 2012, U.S. banks held $183.7 trillion in interest rate contracts.  Just four firms represent 93% of total derivative holdings: JPMorgan Chase, Citibank,  Bank of America and Goldman Sachs.   A criminal investigation by the Canadian Competition Bureau into the rigging of Libor has implicated JPMorgan Bank Canada, Citibank Canada, HSBC Bank Canada, Deutsche Bank AG, and the Royal Bank of Scotland N.V. (RBS).  UBS is cooperating with the probe and providing documents. The Bureau’s demand for production of documents at each of the banks suggest that their derivative traders used emails and instant messaging to communicate artificially high or low bids to the bank’s staff who were submitting rate … Continue reading →

By Pam Martens: July 6, 2012  A five day chart of JPMorgan Chase shows what shareholders think of the company. (The market was closed Wednesday for the July 4th holiday.) Taxpayers have no reason to cheer either.  Each day seems to bring another tax-payer funded investigation of potentially serious wrongdoing at the firm.  The latest probe involves an investigation into JPMorgan for manipulating electric markets in California and the Midwest through its commodities business.  The Federal Energy Regulatory Commission (FERC) issued subpoenas to JPMorgan in April and May.  FERC wanted emails pertaining to its investigation.  JPMorgan is now being sued by FERC in Federal Court in Washington, D.C. to turn over 25 emails it has withheld.   The dispute has erupted into the public spotlight over the incredulous claim by JPMorgan that the emails are subject to attorney-client privilege.  FERC says the emails are between bankers.  How JPMorgan hopes to convince a Federal court … Continue reading →

By Pam Martens: July 5, 2012 Gary Foster, a former low level Vice President of Citigroup, pleaded guilty to embezzling over $22 million from the firm between 2003 and 2010. Last week, Foster was sentenced to 8 years in prison.  Compare Foster’s 7-year take to former Chairman and CEO of Citigroup, Sandy Weill’s, 5-year haul from the firm.  In just one year, 2000, Weill cashed in $196.2 million in stock options and received a bonus of $18.4 million.  His total take in a five year period: $785 million.  There have been no clawbacks of Weill’s pay, despite the near bankruptcy of the firm and the taxpayer bailout owing to tens of billions of toxic assets hidden off the balance sheet.  So how did Weill avoid the fate of Foster?  It’s all about getting a sycophant Board of Directors to rubber stamp your actions, filing the details with regulators, and making sure … Continue reading →

By Pam Martens: July 3, 2012  It is a violation of ethics rules for any member of the House of Representatives to use government equipment or property for political purposes, but the Republican Chair of the House Financial Services Committee, Spencer Bachus, is co-opting the taxpayer funded web site, that is part of the legislative branch of Congress, as a political machine against President Obama and House Democrats.  A steady campaign of bashing the President and the Democrats is on display.  A provision of the Members’ Handbook “permits the incidental personal use of House equipment and supplies when such use is negligible in nature, frequency, time consumed, and expense.  However, this policy applies only to incidental personal use of those resources, and not to their use for campaign or political purposes.” (Emphasis in original.)  Under rules issued by the Committee on House Administration and detailed in the Members’ Handbook and … Continue reading →

By Pam Martens: July 2, 2012 We’ve received some snarky comments about our article at AlterNet today (and here) on the factually challenged reporting at the New York Times, suggesting anyone who wants to restore the Glass-Steagall Act is a raging socialist. (Interestingly, the attackers are silent on the boatload of misreported “facts” in the New York Times.)  Yes, those wild-eyed socialists at the Dallas Federal Reserve and Thomas Hoenig, FDIC director and recent director of the Kansas City Federal Reserve and John Reed, former CEO of Citibank, don’t know what they’re talking about either when they say the big banks must be broken up. I recall a veteran activist telling me once, you can gauge the strength of the challenge by the degree of the backlash.

By Pam Martens: July 1, 2012 Spencer Bachus is the Chairman of the powerful House Financial Services Committee. On June 19, 2012, Bachus issued a press release that carried his opening remarks for the hearing on JPMorgan’s $2 billion (and growing) losses.  The final sentence of that prepared text read as follows:  “Before closing, once again I want to re-emphasize the point that JPMorgan and its shareholders – not the bank’s clients, and more importantly, not the taxpayers – are the ones paying for the bank’s mistakes. This is how the system is supposed to work.”  This is how the system is supposed to work? Maybe for the Russian Mafia or in some dystopian universe where only descendants of the Koch brothers are permitted to live.  But here in America, those who have not yet had a Fox News lobotomy, believe this is exactly how the system is not meant to … Continue reading →

By Pam Martens: June 29, 2012 Recent settlements by the Securities and Exchange Commission (SEC) have sent a dangerous message to Wall Street: feel free to lie freely to investors and shareholders as long as you have deep pockets.  In 2007, Citigroup told investors it had $13 billion in subprime exposures, knowing the figure was in excess of $50 billion.  It got caught and on July 29, 2010 paid $75 million to settle charges with the SEC.  Its CFO, Gary Crittenden, was fined a puny $100,000 and the head of its Investor Relations Department, Arthur Tildesley, was fined an even punier $80,000.  That sent a clear message to Wall Street, lying about the risks you are taking or what’s on your balance sheet results in a slap on the wrist and some chump change.  Lying has now morphed into its own profit center.  Also in July 2010, Goldman Sachs settled … Continue reading →