Search Results for: Federal Reserve

By Pam Martens and Russ Martens: March 26, 2024 ~ According to Federal Deposit Insurance Corporation (FDIC) data, there were 14,417 federally-insured banking institutions in the U.S. in 1985. As of December 31, 2023, the FDIC reports there are only 4,587 remaining. The vast majority of the 9,830 banks that have disappeared since 1985 did not fail – they were merged with other banks. Today, just four banks control $9.3 trillion in consolidated bank assets or 39 percent of all bank assets. Those four banks are JPMorgan Chase with $3.395 trillion in consolidated assets; Bank of America with $2.540 trillion; Wells Fargo with $1.7 trillion; and Citigroup’s Citibank with $1.685 trillion. (All asset figures are as of December 31, 2023 and come from the Federal Reserve’s statistical release of the largest banks.) The political clout of these mega banks is such that one of them, JPMorgan Chase, has been allowed to commit … Continue reading →

By Pam Martens and Russ Martens: March 19, 2024 ~ According to data from the Federal Deposit Insurance Corporation, and using a graph from the St. Louis Fed above, the liquidity crisis among banks in the spring of last year was far more dramatic than has been acknowledged by banking regulators. According to the data, during the worst financial crisis since the Great Depression (at the end of the fourth quarter of 2008 when Wall Street was in a state of collapse), banks had borrowed a total of $790 billion in advances from Federal Home Loan Banks (FHLBs). But during the bank panic in the spring of last year, those FHLB advances topped the Q4 2008 number, registering $804 billion as of March 31, 2023. According to data from the Congressional Budget Office, at the end of the quarter before the banking panic of 2023 (the quarter ending December 31, 2022) … Continue reading →

By Pam Martens: March 13, 2024 ~ From revoking the American people’s right to a jury trial in matters involving Wall Street; to brazenly thumbing their nose at anti-trust law; to trading the stock of their own bank in the darkness of their own dark pools; to forming their own stock exchange; to committing serial felonies without being criminally prosecuted or having their bank charters revoked – Wall Street mega banks have drawn a law-free zone around themselves and are more dangerous today than they have ever been in U.S. history. The most dangerous eras for the American people versus Wall Street mega banks have been the late 1920s and 1930s; 2007 to 2010; and today. We know that today is the most dangerous era because we read 12,000 pages produced by the Senate Banking Committee of the early 1930s on the Wall Street corruption in the late 20s and 30s; we … Continue reading →

By Pam Martens and Russ Martens: March 11, 2024 ~ On Sunday, February 4, the CBS program 60 Minutes aired a taped interview with Federal Reserve Chairman Jerome Powell. The actual interview had occurred three days earlier and was conducted by 60 Minutes interviewer Scott Pelley. Two noteworthy things happened in connection with that interview: First, CBS did not indicate above the transcript of the interview that Powell’s comments had been materially shortened in the program that aired on TV; secondly, Powell calls the real estate problem at the largest banks “manageable” while shifting the more serious real estate loan problem to “smaller and regional banks.” Below is what Powell had to say about problem real estate loans at U.S. banks in the 60 Minutes’ interview. The bracketed bold text is what is in the transcript but did not air in the broadcasted program on television. (Scroll to 8 minutes and 20 … Continue reading →

By Pam Martens and Russ Martens: March 7, 2024 ~ Engaged Americans are watching in real time a replay of how Wall Street mega banks in 2008 created the worst financial collapse since the Great Depression, then used their campaign money and lobbying clout to intimidate Congress and the Obama administration into passing the pathetically watered down financial “reform” legislation known as Dodd-Frank in 2010. The Fed has been bailing out the mega banks’ excesses and casino style of banking ever since. The same dynamic is playing out today with the proposal by three federal banking regulators (the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency and the Federal Reserve) to strengthen the capital requirements on the 37 largest banks in the U.S. – less than one percent of all banks in the U.S. For important background on the capital proposal, see our reports below: The Fed … Continue reading →

By Pam Martens and Russ Martens: March 6, 2024 ~ On June 11, 2015, the Office of Financial Research (OFR) released a sobering report on how banks were reducing their requirements to hold adequate capital against potential losses by engaging in non-transparent “capital relief trades” with potentially questionable counterparties. The OFR researchers summarized the problem as follows: “Capital relief transactions may have benefits to banks. But, even if real risk transfer is involved, these transactions can pose financial stability concerns by increasing interconnectedness, transforming credit risk into counterparty risk, and obscuring capital adequacy to investors and counterparties. And while bank supervisors have extensive data about banks, they may have less information about the nonbanks who are selling credit risk to those banks and ultimately bearing the risk of loss.” The Office of Financial Research was created under the Dodd-Frank financial reform legislation of 2010 to make sure that Wall Street mega banks … Continue reading →

By Pam Martens and Russ Martens: February 29, 2024 ~ On Tuesday, the Vice Chair for Supervision at the Federal Reserve, Michael Barr, delivered a speech at a risk management conference in Manhattan. Barr’s objective was to convince conference attendees that the Fed has its eye on the ball when it comes to Wall Street mega banks and their counterparties who are sitting on the opposite sides of derivative trades totaling tens of trillions of dollars. (Yes, trillions.) The most illuminating and dangerous elements of Barr’s speech are what he didn’t say. To remind attendees of what could happen if counterparty risks were not managed properly, Barr cited Long Term Capital Management (LTCM) and Archegos Capital Management. LTCM was a hedge fund stocked with the so-called “smartest men in the room,” including two Nobel laureates, who fed mathematical formulas into computers that generated trades using astronomical levels of leverage. Of course, this … Continue reading →

By Pam Martens and Russ Martens: February 22, 2024 ~ According to Federal Reserve data dating back to July 3, 1985 – a span of close to 39 years – there has not been a time when the largest 25 banks were bleeding deposits on the scale that has been happening for the past 22 months. There has also never been a time comparable to the last 22 months when the largest 25 banks were bleeding deposits while the smaller banks were growing deposits. (See the chart above.) To get our minds around today’s situation, we made another chart using Federal Reserve data dating back to 1998 – the year before the Glass-Steagall Act was repealed. It shows that the ratio of deposits of the 25 largest banks to the smaller banks stood at 3 times in 1998 and has shrunk to its lowest level of 2.03 times as of February 7 … Continue reading →

By Pam Martens and Russ Martens: February 14, 2024 ~ At the exact moment that the stock market closed on Monday, Reuters dropped a bombshell in Warren Buffett’s lap with news that federal banking regulators are breathing down Citigroup’s neck. Buffett’s Berkshire Hathaway owns 55,244,797 shares of Citigroup, according to its last 13F filing with the SEC. The bulk of the stake was acquired in the first quarter of 2022. (See our report: Warren Buffett Is Taking a Flyer on $3 Billion of Citigroup’s Stock — After It Loses 40 Percent in a Year.) While a $3 billion stock holding is chump change for Berkshire (as of its last 13F filing, it owned approximately $33 billion in Bank of America stock), Buffett has a stock-picking reputation to defend and neither the history of Citigroup nor its troubles today are boosting that reputation. On Monday, with the strike of the closing bell, Reuters … Continue reading →

By Pam Martens and Russ Martens: February 13, 2024 ~ According to the Financial Crisis Inquiry Commission (FCIC), derivatives played a major role in the financial crash of 2007 to 2010 in the United States, the worst financial crisis in the U.S. since the Great Depression of the 1930s.  The FCIC wrote in its final report: “…the existence of millions of derivatives contracts of all types between systemically important financial institutions — unseen and unknown in this unregulated market — added to uncertainty and escalated panic….” Americans believed that the Dodd-Frank financial reform legislation of 2010 would fulfill its promise of reining in concentrated risks like derivatives. It did not. (See our report from 2015: President Has His Facts Seriously Wrong on Financial Reform.) According to data from the Office of the Comptroller of the Currency (OCC), the regulator of national banks, as of March 31, 2009, five bank holding companies held … Continue reading →