Search Results for: Janet Yellen

By Pam Martens and Russ Martens: December 10, 2015 The Office of the Comptroller of the Currency (OCC), which regulates national banks, including the behemoth Wall Street banks that either blew themselves up or became part of shot-gun marriages during the 2008 crash to avoid outright collapse, issued a warning yesterday that credit risks are rising at banks. The rising risks are the result of a loosening of loan underwriting standards, which, says the OCC, “reflects broad trends similar to those experienced from 2005 through 2007, before the most recent financial crisis….” The first question that comes to mind from this report is what good is increased capital at the mega banks if the banks are simultaneously increasing the riskiness of the loans on their books. The next question is why the regulators have sat back and watched this risk grow over the past tumultuous year without nipping it in … Continue reading →

By Pam Martens and Russ Martens: December 9, 2015 Paranoia is rampant among Republicans on the House Financial Services Committee and was on display throughout its hearing yesterday. Unfortunately for the nation, much of that paranoia is well founded. Just take a look at the photo above. The panel of witnesses that testified yesterday represent just eight of the ten voting members of the Financial Stability Oversight Council (FSOC; which is pronounced F-Sock), another layer of oversight imposed by the Dodd-Frank financial reform legislation of 2010 to monitor an ever sprawling octopus of a financial system that looks to most Americans as if it is still out of control, seven long years after the greatest financial collapse since the Great Depression. Behind each of the regulators on the panel (see list and testimony below), with the exception of S. Roy Woodall, the independent member of FSOC with insurance expertise, there … Continue reading →

By Pam Martens and Russ Martens: December 1, 2015 Yesterday, the Federal Reserve Board of Governors voted 5-0 to approve a new rule that was required under the 2010 Dodd-Frank financial reform legislation to rein in the type of vast, secret, and below-market-rate lending the Fed engaged in during the 2007 to 2010 financial crisis. But rather than rein in its hubris, the Fed seems to have gone out of its way to emphasize that it has the power to make loans to “persons,” not just financial firms whose illiquidity might pose a threat to the nation’s overall financial stability. Most Americans understand that the U.S. is experiencing unprecedented wealth inequality and that there are many billionaires in the U.S. whose net worth exceeds that of many regional banks (think Koch brothers or the Walton family behind Walmart). But if individual “persons” should get in a financial bind, is it … Continue reading →

By Pam Martens and Russ Martens: November 5, 2015  According to the Random House dictionary, Stockholm Syndrome is “an emotional attachment to a captor formed by a hostage as a result of continuous stress, dependence, and a need to cooperate for survival.” Regulatory capture – where big banks are actually the ones calling the shots to their regulators – appears to have morphed into Stockholm Syndrome based on a Congressional hearing yesterday.  House Financial Services Committee Chairman Jeb Hensarling dropped a bombshell on Federal Reserve Chair Janet Yellen in opening questions yesterday on the Fed’s role of supervising the largest, most systemically dangerous banks. Hensarling queried if the Fed had crossed the line from being regulator to manager. We think the question should have been has the Fed devolved from regulator to emotionally-attached hostage. (There’s plenty of evidence for the latter as we’ll explain later in this piece.) The exchange … Continue reading →

By Pam Martens and Russ Martens: October 14, 2015 In the minds of millions of viewers, Hillary Clinton came across in last night’s Democratic debate on CNN as polished, articulate and knowledgeable about the issues. But for those of us who understand that the greatest threat to America is not some foreign power but home-grown financial terrorists wielding trillions of dollars in high-risk derivatives in taxpayer-insured banks on Wall Street, she is the same old problem, not the solution. Senator Bernie Sanders of Vermont, on the other hand, who calls himself a Democratic Socialist, was in Congress leading the fight to stop the repeal of the Glass-Steagall Act in 1999 and is still leading the charge to restore it before the next financial crash destroys what’s left of the U.S. economy. (The Glass-Steagall Act prohibits insured banks from being affiliated with high risk investment banks or stock brokerage firms.) It … Continue reading →

By Pam Martens and Russ Martens: October 5, 2015  Last week we wrote about the invisible hand’s removal of a negative paragraph on the financial industry from the Pope’s speech before a joint session of Congress and some bizarre shenanigans with Fed Chair Janet Yellen’s highly anticipated speech in Amherst, Massachusetts. This past Saturday, Adam Posen, the President of a powerful think tank, the Peterson Institute for International Economics, delivered a speech at a conference sponsored by the Federal Reserve Bank of Boston, calling the U.S. Financial Stability Oversight Council (FSOC) “a mess.” That speech has gone missing from online access. FSOC is the body created under the Dodd-Frank financial reform legislation of 2010 to reassure the American people that Wall Street would never again be able to take the U.S. economy, the financial system, and the housing market to the cleaners and then get a multi-trillion dollar bailout. FSOC … Continue reading →

By Pam Martens and Russ Martens: October 1, 2015 An uncanny number of people woke up this week with the same thought – it’s time to panic over the size, structure and illiquidity of the junk bond market. (Not to put too fine a point on it, but Wall Street On Parade made the warning in 2013 and again on August 18 of this year.) On Tuesday morning, it was both Carl Icahn, the famous hostile takeover artist and hedge fund billionaire, along with the more staid academics at the International Monetary Fund (IMF), who issued junk bond warnings. (Junk bonds are corporate debt with ratings below investment grade, also known as “high yield” bonds.) Icahn released a video (see clip below) assigning blame to companies like BlackRock which have bundled illiquid junk bonds into Exchange Traded Funds (ETFs), listed them on the New York Stock Exchange, and sat back … Continue reading →

By Pam Martens and Russ Martens: September 23, 2015  We may have just gotten our answer to the puzzling question of why we can put a man on the moon but the Securities and Exchange Commission can’t create a consolidated tape of our markets for forensic auditing purposes: a consolidated tape would tell us just who it is that is messing around with stock futures in the middle of the night as well as creating flash crashes during the trading day. We thought it was very peculiar that prior to the opening of the U.S. stock market this morning, futures on the Standard and Poor’s 500 index had staged a miraculous rally on the heels of distressing manufacturing news out of China last night. According to the preliminary Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) which was released last evening, manufacturing activity in China dropped to 47.0 in September, the … Continue reading →

By Pam Martens and Russ Martens: September 8, 2015  When the revision to second quarter Gross Domestic Product was released by the Commerce Department on August 27, boosting GDP to 3.7 percent, it had a lot of people scratching their heads. Consumer Metrics Institute came right out with it, writing: “Once again we wonder how much we should trust numbers that bounce all over the place from revision to revision. One might expect better from a huge (and expensive) bureaucracy operating in the 21st century. Among major economies, only the Chinese numbers are more suspect.” Ouch. Jeffrey Sparshott and Jon Hilsenrath, economic writers at the Wall Street Journal, were more subtle in their assessment, suggesting that “How fast the economy grew depends on how you measure it. An alternative measure, gross domestic income, advanced at a much slower 0.6% pace last quarter. Both GDP and GDI measure overall economic activity … Continue reading →

  By Pam Martens and Russ Martens: July 31, 2015  The commodities slump has accelerated this past month with gold now trading at five-year lows and the U.S. crude benchmark, West Texas Intermediate (WTI), down 19 percent in just the past month, 49 percent on the year, and 57 percent in the past two years. In early morning trade, WTI is at $47.82 versus $110 two years ago. Minutes of the Federal Reserve’s Open Market Committee meeting on December 16 and 17 reveal that the Fed was expecting an upturn in oil prices this year, writing: “…inflation was projected to reach the Committee’s objective over time, with longer-run inflation expectations assumed to remain stable, prices of energy and non-oil imports forecast to begin rising next year, and slack in labor and product markets anticipated to diminish slowly.” CNN Money is reporting this morning that major iron ore or metals exporting … Continue reading →