Search Results for: Janet Yellen

By Pam Martens and Russ Martens: June 16, 2016  If you think that a referendum vote on June 23 by UK citizens on whether to withdraw from the European Union (called Brexit, short for British Exit), is simply a proxy on whether the UK should dislodge itself from the edicts of Brussels, think again. It’s morphed into a much broader debate on whether citizens worldwide should surrender their right to a participatory democracy in order to further the interests of multinational corporations, secret trade agreements packed with secret court tribunals, global banking hegemony and central banks attempting to keep all these balls in the air for their one percent overlords. One particular central bank is sure to come under fire today. Members of the British Parliament have been warning Mark Carney, head of the Bank of England (BOE), to not engage in political lobbying on the issue of Brexit, which … Continue reading →

By Pam Martens and Russ Martens: April 13, 2016  The Wall Street Journal reported yesterday that two Federal regulators, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), are set to “reject” the living wills of potentially four systemically important banks, including the largest bank in the U.S., JPMorgan Chase. The three other banks named are Bank of New York Mellon, State Street and Bank of America. Under Section 165 of the financial reform legislation known as Dodd-Frank, banks designated as systemically important must submit living wills to the Fed and FDIC explaining how they can be “rapidly” liquidated if they fail without bringing down the rest of the financial system – as occurred in 2008. A serious dust-up occurred on July 15, 2014 during a Senate Banking hearing between Senator Elizabeth Warren and Fed Chair Janet Yellen on the matter of these living wills. Warren told Yellen that at … Continue reading →

By Pam Martens and Russ Martens: April 7, 2016  If anyone needs one more reason to break up the mega banks on Wall Street, simply look at what happened following the Federal Reserve’s quarter of a percentage point rate hike on December 16 of last year. On that date, the Fed moved off its seven year zero interest rate policy (ZIRP), which had been a bonanza for the banks and a starvation plan for seniors living on fixed income investments like Treasury notes and CDs, and raised its benchmark rate by a quarter of a percentage point to between 0.25 percent and 0.50 percent from its former 0.0 to 0.25 percent. The following then happened in short order in 2016: By Friday, January 15, Citigroup closed down on the day a gut-churning 6.41 percent, bringing its share price losses to a whopping 30 percent from its July 2015 high. Citigroup … Continue reading →

By Pam Martens and Russ Martens: March 10, 2016 Four days after the Federal Reserve Board of Governors held an open meeting to propose a new rule to contain counterparty risk on Wall Street on a bank by bank basis, researchers at the U.S. Treasury’s Office of Financial Research (OFR) dropped a bombshell on the Fed. The researchers, Jill Cetina, Mark Paddrik, and Sriram Rajan, produced a study which shows, in their opinion, that the Fed’s stress test that measures counterparty risk on a bank by bank basis is all wet. The problem, say the researchers, is not what would happen if the largest counterparty to a specific bank failed but what would happen if that counterparty happened to be the counterparty to other systemically important Wall Street banks. The researchers note that the Fed’s stress test “looks exclusively at the direct loss concentration risk, and does not consider the … Continue reading →

By Pam Martens and Russ Martens: March 8, 2016  Last Friday, the Obama administration announced that the President would be meeting at the White House with key Wall Street regulators yesterday. In fact, the meeting yesterday included 9 of the 10 voting members of the Financial Stability Oversight Council (F-SOC), the body created under the 2010 Dodd-Frank financial reform legislation to prevent another catastrophic collapse of the U.S. financial system. The President also brought along a key group of his economic advisers and, interestingly, Neil Eggleston, the White House Counsel. (See full attendee list below.) F-SOC is chaired by U.S. Treasury Secretary, Jack Lew, who likely functions as President Obama’s eyes and ears on the Council and for financial stability issues in general. Lew attended yesterday’s meeting and sat across from the President at the press conference that followed. (See video of full press conference below.)  Lew may have some … Continue reading →

By Pam Martens and Russ Martens: February 11, 2016  Yesterday during the House Financial Services Committee hearing to take semi-annual testimony from the Fed Chair on monetary policy and the health of the U.S. economy, a tense exchange took place between Congressman Sean Duffy and Fed Chair Janet Yellen. (See video clip below.) Duffy effectively accused Yellen of defying a Congressional subpoena related to a House investigation of a Fed leak in 2012. The House investigation centers around a quite brazen newsletter put out by a firm called Medley Global Advisors that in 2012 reported what the Fed’s FOMC minutes were going to reveal the following day.  One revelation from the newsletter referred to continued large bond purchases by the Fed as follows: “Tomorrow’s minutes will reference a staff paper that concludes the market has capacity to absorb purchases this large for a period of time.” When the Fed released … Continue reading →

By Pam Martens and Russ Martens: February 4, 2016 Last night ABC began its two-part series on the Bernie Madoff fraud. Viewers will be reminded about how investment expert, Harry Markopolos, wrote detailed letters to the SEC for years, raising red flags that Bernie Madoff was running a Ponzi scheme – only to be ignored by the SEC as Madoff fleeced more and more victims out of their life savings. Today, there are two equally erudite scribes who have jointly been flooding the SEC with explosive evidence that some Exchange Traded Funds (ETFs) that trade on U.S. stock exchanges and are sold to a gullible public, may be little more than toxic waste dumped there by Wall Street firms eager to rid themselves of illiquid securities. The two anonymous authors have one thing going for them that Markopolos did not. They are represented by a former SEC attorney, Peter Chepucavage, … Continue reading →

By Pam Martens and Russ Martens: January 22, 2016  We are in the midst of an unprecedented collapse in commodity and oil markets, fueling fears about every kind of debt from emerging markets to junk bonds held in U.S. listed Exchange Traded Funds (ETFs). In this midst of this raging fear, what has the U.S. Federal Reserve proposed? It’s proposed a plan to make banks “safer” by making them issue more debt and become more highly leveraged. We’re not kidding folks. Back in October, Fed Chair Janet Yellen had this to say about the plan: “The long-term debt requirement we are proposing today, combined with our other work to improve the resolvability of systemic banking firms, would substantially reduce the risk to taxpayers and the threat to financial stability stemming from the failure of these firms. This is an important step toward ending the market perception that any banking firm … Continue reading →

By Pam Martens and Russ Martens: December 30, 2015  Yesterday Larry Summers penned an opinion piece for the Washington Post, lecturing Senator Bernie Sanders of Vermont, a Presidential candidate, on what Sanders should actually be saying in his own op-eds about reforming the Federal Reserve.  No one will ever accuse Larry Summers of being short on arrogance. After promising the American people in 1999, as Treasury Secretary in the Bill Clinton administration, that pushing through the repeal of the Glass-Steagall Act would be “the right framework for America’s future financial system,” then watching that system collapse as a result of that repeal just nine years later in the worst economic upheaval since the Great Depression, one would think Summers would find some obscure hole in academia and crawl into it. Instead, Summers went on to become President of Harvard where, in 2005, he suggested at an economics conference that women … Continue reading →

By Pam Martens and Russ Martens: December 14, 2015  Last week we saw shades of 2007 with both a hedge fund and junk bond mutual fund halting the ability of investors to withdraw funds. An additional credit hedge fund announced it is shutting down. The problem this time around is a dearth of liquidity (read buyers’ strike) for junk bonds. In 2007 the problem was subprime mortgage backed securities and related derivatives. On June 7, 2007, long before anyone recognized that they were in the first inning of what would become the epic financial crash of 2008, Bear Stearns quietly sent a letter to investors in its High-Grade Structured Credit Strategies Enhanced Leverage Fund, telling them it was suspending the ability of investors to withdrawal their money from the hedge fund because the “investment manager believes the company will not have sufficient liquid assets to pay investors.” The following month, … Continue reading →