By Pam Martens and Russ Martens: June 27, 2024 ~ Yesterday the House Financial Institutions and Monetary Policy Subcommittee held a hearing titled “Stress Testing: What’s Inside the Black Box?” The hearing was convened to examine the manner in which the Federal Reserve conducts its stress tests of the megabanks. The witnesses called to testify included the following: an employee of the Financial Services Forum, a registered lobbyist for  banks; an employee of the Bank Policy Institute, a registered lobbyist for banks; Jonathan Gould, a lawyer from Jones Day, whose clients are banks; and one lonely soul, Greg Feldberg, Research Director of the Yale Program on Financial Stability, who was the only credible voice on the witness panel. The Chair of this Subcommittee is Andy Barr, a Republican from Kentucky whose largest four campaign donors are the following: employees of the Wall Street private equity firms Apollo Global Management and Blackstone … Continue reading →

By Pam Martens and Russ Martens: June 26, 2024 ~ According to Federal Reserve data, for the first time in its history, the Fed has been losing money on a consistent monthly basis since September 28, 2022. As of the last reporting date of June 19, 2024, those losses add up to a cumulative $176 billion. As the chart above using Fed data shows, the losses thus far in 2024 have ranged from a monthly high of $11.076 billion in February to a low of $5.674 billion in May. These losses are separate and distinct from the unrealized losses the Fed is experiencing on the debt securities it holds on its balance sheet. It does not mark those losses to market since it intends to hold the securities to maturity and their principal is guaranteed at maturity by the U.S. government. The losses shown in the above chart are actual cash … Continue reading →

By Pam Martens and Russ Martens: June 25, 2024 ~ Last Friday, Goldman Sachs Bank USA, the federally-insured, U.S. taxpayer-backstopped commercial bank that the international trading behemoth, Goldman Sachs Group, is allowed to operate, got a smackdown from two of its regulators, the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board (the Fed). The two regulators released a letter they had sent to David Solomon, Chairman and CEO of Goldman Sachs Group, which revealed that the commercial bank had flunked its wind-down test known as its “living will.” Derivatives were specifically cited for the “shortcomings.” Of particular note, the regulators wrote that Goldman Sachs Bank USA “…did not demonstrate the ability to model its derivatives portfolio unwind by counterparty for segmenting the portfolio in resolution. In the [upcoming] 2025 Plan, the Covered Company should demonstrate the ability to view derivatives positions at a counterparty level within both the portfolio … Continue reading →

By Pam Martens and Russ Martens: June 24, 2024 ~ Since the financial crash of 2008 and the Fed’s multi-trillion dollar bank bailouts that followed, the Office of the Comptroller of the Currency (OCC) has been waving a giant red flag every quarter in its “Bank Trading and Derivatives Activities” reports. For sixteen years the OCC has been reporting that just four megabanks are responsible for more than 80 percent of the trillions of dollars in bank derivatives. As the chart above shows, as of December 31, 2023, Goldman Sachs Bank USA, JPMorgan Chase Bank N.A., Citigroup’s Citibank and Bank of America held a staggering total of $168.26 trillion in derivatives out of a total of $192.46 trillion at all U.S. banks, savings associations and trust companies. That’s four banks holding 87 percent of all derivatives at all 4,587 federally-insured institutions in the U.S. that existed as of December 31, 2023. … Continue reading →

By Pam Martens and Russ Martens: June 20, 2024 ~ On Tuesday, a stock most Americans had never heard of four years ago – Nvidia – closed with a market cap of $3.34 trillion. That makes it the most valuable company in the world, overtaking Microsoft’s heady $3.32 trillion market cap. Nvidia’s share price (ticker NVDA) has soared 174 percent year-to-date while the S&P 500 is up just 15 percent. The much broader index, the Russell 2000, has flat-lined this year. (See chart above.) Without the gains from Nvidia, the S&P 500 would be reporting one-third less percentage increase year-to-date. Nvidia trades on the Nasdaq stock market. Its share price has been riding the artificial intelligence (AI) hype in a manner reminiscent of how the Nasdaq skyrocketed in value on the tech and dot.com mania of the late 1990s. That era did not end well, to put it mildly. The Nasdaq … Continue reading →

By Pam Martens and Russ Martens: June 19 2024 ~ On January 29, Anne Marie Murphy and two of her colleagues at law firm Cotchett, Pitre & McCarthy, LLP in Santa Monica, California filed a lawsuit in Superior Court on behalf of a 76-year old widow, Diane Artemis Yaffe. Scammers had tricked Ms. Yaffe into making seven wire transfers out of her Chase Bank account, which tallied up to the astonishing sum of $1.8 million, or the bulk of her funds at the time.  There are three things which jump out of the factual details in the case that would appear to be legally problematic for Chase Bank – the federally-insured, retail banking unit of JPMorgan Chase Bank, N.A. First, the six figure wires were completely out-of-character for this elderly client. Second, the huge sums were being wired out of the country. Third, the funds that Chase Bank wired were originally … Continue reading →

By Pam Martens and Russ Martens: June 18, 2024 ~ Senator Sherrod Brown, a Democrat and life-long Ohioan, is running for his fourth term in the U.S. Senate, after more than 17 years of proving consistently with his voice and actions that it’s the working class of Ohio that he stands up for in Congress. It would seem that Brown’s reelection should be an easy win. Instead, it will be one of the most expensive Senate races in U.S. history with the outcome dependent on just how vile and vicious the attack ads funded by out-of-state billionaires are against Brown. According to AdImpact.com, outside groups have reserved $92.8 million in ads they plan to run supporting Brown’s Republican challenger, Bernie Moreno, a man who has bragged about his early “lower-middle-class status,” but whom the New York Times describes as being “born into a rich and politically connected family” in Bogotá, Columbia. … Continue reading →

By Pam Martens and Russ Martens: June 17, 2024 ~ Last Monday, Robert J. Cleary of law firm Patterson Belknap filed a motion in the bankruptcy proceeding of Sam Bankman-Fried’s collapsed fraud, the FTX crypto exchange, seeking to launch three new investigations into legal work done by Sullivan & Cromwell for Bankman-Fried and FTX prior to the collapse of the fraud. Cleary is the independent examiner appointed by the U.S. Department of Justice’s U.S. Trustee, which acts as a watchdog in federal bankruptcy cases. Adding to the embarrassment for Sullivan & Cromwell with the announcement of the new investigations is the fact that Sullivan & Cromwell fought against allowing the U.S. Trustee to appoint an independent examiner after it had maneuvered itself into the position of lead counsel to the FTX bankruptcy proceeding, despite its multitude of conflicts with FTX. The presiding judge in the bankruptcy case, John Dorsey, had sided … Continue reading →

Editor’s Note: For watchdog Better Markets’ detailed analysis of crypto’s “track record of lawlessness, deception, fraud, and investor losses,” see here. By Pam Martens and Russ Martens: June 13, 2024 ~ As meticulously chronicled by Jane Mayer and numerous others, the billionaire owners of fossil fuels giant Koch Industries — Charles Koch and his late brother, David Koch – spent decades building the tentacles of what became known as the Kochtopus. It was, and remains, a sprawling network of Super Pacs, nonprofits, dark money groups, activist groups and think tanks deployed to push an anti-regulatory agenda in Congress – particularly when it comes to fossil fuels and climate change. Koch’s latest addition is an Orwellian voter-mining database and its dangerous appendages. Crypto billionaires appear to have studied the Koch playbook carefully and are now rapidly rolling out a strikingly similar network. As we reported on Tuesday, a handful of crypto billionaires … Continue reading →

By Pam Martens and Russ Martens: June 12, 2024 ~ Yesterday, The Hill published an OpEd by the man who, literally, wrote the book on the megabanks: Arthur E. Wilmarth, Jr., Professor Emeritus of Law at George Washington University Law School. Wilmarth raised critical points on why these megabanks continue to pose unacceptable levels of risk to U.S. financial stability and need to dramatically boost their equity capital – notwithstanding their fierce lobbying and propaganda battle to overturn the proposed new capital rules by bank regulators. The forces of the universe seemed to align with Wilmarth’s gutsy OpEd yesterday. In a display of just how dangerously interconnected with derivatives these megabanks remain, their share prices tanked in tandem yesterday despite the S&P 500 and Nasdaq indexes each setting a new record high. The contagion among the megabanks spread after French President Emmanuel Macron called snap parliamentary elections for June 30 and … Continue reading →