By Pam Martens and Russ Martens: May 24, 2019 ~ Most stock owners of J.C. Penney never thought they’d see the day when it traded as a penny stock. But that’s what happened yesterday when shares of the large retailer closed at 91 cents, a loss of 9.79 percent on the day. The macro picture is that J.C. Penney employs 95,000 people and operates 864 stores across the United States. Its future will have an impact on jobs and commercial real estate prices in the United States. At 91 cents a share, those prospects aren’t looking too good right now. The broader markets fared better than J.C. Penney yesterday but were, nonetheless, a sea of red. After being down more than 400 points intraday, the Dow Jones Industrial Average closed with a loss of 286 points or 1.11 percent at 25,490. The Nasdaq, laden with tech losers, lost 122.5 points … Continue reading →

By Pam Martens and Russ Martens: May 23, 2019 ~ U.S. Treasury Secretary Steve Mnuchin appeared yesterday before the House Financial Services Committee. You know it was a bad day for the Secretary when the low point was not Congressman Stephen Lynch’s request to the Chair, Maxine Waters, to have Mnuchin held in contempt for not following the statute that calls for the IRS to turn over tax returns on any American when requested by an authorized Committee of Congress. Mnuchin has said he will not turn over the tax returns of the President of the United States, which are under subpoena by Congress. (The Internal Revenue Service, which holds these tax returns, is an agency of the U.S. Treasury.) Waters said she will seek the advice of the Committee’s counsel on the contempt request. A number of Democratic members of the Committee intensely questioned Mnuchin on  his myriad deregulatory … Continue reading →

By Pam Martens and Russ Martens: May 22, 2019 ~ Reading the New York Times is apparently now seen as being disloyal to the President of the United States if you’re a Federal employee. Just holding the newspaper in one’s hands might be enough to become an early pensioner in the Trump administration. Yesterday it became crystal clear at a Senate Banking hearing just how terrified people are in the Federal government of getting on the wrong side of the President and ending up being publicly bashed on his Twitter page. The Senate Banking hearing on Tuesday was called to get answers from the witness panel on how to combat money laundering in the United States by shell companies that keep their real owners a secret. But it quickly became a hearing also about the bombshell report from the New York Times on Sunday. That article, by David Enrich, describes … Continue reading →

By Pam Martens and Russ Martens: May 21, 2019 ~ After chasing the super rich for a century, JPMorgan and Goldman Sachs are now offering no minimum accounts. As we will explain shortly, their motives may not be all that altruistic. In March of 2016, the Wall Street Journal’s Emily Glazer reported that clients of JPMorgan Chase’s Private Bank “will be required to have at least $10 million in investible assets, twice the current minimum of $5 million.” What smells like real money to Goldman Sachs has also been eight-figures and higher. In 2013, the New York Times reported that Goldman had a $10 million minimum to manage private wealth and was booting out its own employees’ accounts if they were less than $1 million. High net worth individuals are what each of the mega Wall Street banks look for since the more money the bank invests, the more fees it generates … Continue reading →

By Pam Martens and Russ Martens: May 20, 2019 ~ Yesterday, every U.S. television network carried the New York Times bombshell that Deutsche Bank employees had flagged suspicious activity in the bank accounts of President Donald Trump and his son-in-law, Jared Kushner, involving foreign money flows, but their superiors at Deutsche Bank did not allow the reports to be filed with the Financial Crimes Enforcement Network (FinCEN), a unit of the U.S. Treasury that is mandated under law to receive and investigate such reports. From there the news went viral around the globe, landing on cable news, Reuters and in European newspapers. (Shortly after trading opened this morning on the New York Stock Exchange, Deutsche Bank’s stock traded at an all-time low of $7.39. This was a $120 stock in 2007.) There is no disputing the fact that this is a critical development, for the following key reasons that we will … Continue reading →

By Pam Martens and Russ Martens: May 17, 2019 ~ At a House Financial Services Committee hearing yesterday, Republicans attempted to marshal arguments for why U.S. banks needed more relief from regulatory oversight. Those arguments weren’t helped by the news of the day. As the hearing got underway, headlines were being promulgated around the globe that JPMorgan Chase, Citigroup and three foreign banks had been fined $1.2 billion by the European Commission for rigging foreign exchange markets. The U.S. Department of Justice leveled criminal felony charges on the same two U.S. banks in 2015 for rigging the same market. Both banks admitted to the charges at that time. A decade after the greatest financial crash in the United States since the Great Depression; after the Dodd-Frank financial reform legislation has failed miserably in stopping the ongoing crime spree by Wall Street’s largest banks; and as radical right-wing members of Congress … Continue reading →

By Pam Martens and Russ Martens: May 16, 2019 ~ What the United States desperately needs is less Financial Stability Reports and actual financial stability – rather than the Wall Street Casino in drag as Federally-insured banks. The Office of Financial Research (OFR), created under the Dodd-Frank financial reform legislation of 2010, publishes a Financial Stability Report; the Financial Stability Oversight Council (F-SOC), also created under Dodd-Frank legislation, publishes an annual report to call attention to any emerging threats to financial stability; and, not to be left out, the Federal Reserve has decided it needs to have its own say in its own Financial Stability Report – ostensibly to make it appear that it’s on top of the threats emanating from its charges on Wall Street – which it decidedly is not. Another reason the Fed may want its own Financial Stability Report is to create the illusion that things … Continue reading →

By Pam Martens and Russ Martens: May 15, 2019 ~ The House Financial Services Committee, Chaired by Democratic Congresswoman Maxine Waters, has been doing the heavy lifting for Congress when it comes to oversight of the mega banks on Wall Street. After grilling the CEOs of these banks on April 10, the Committee will convene again tomorrow to grill the Federal regulators of these serially charged mega banks. The witness list includes: Rodney Hood, Chairman, National Credit Union Administration; Jelena McWilliams, Chairman, Federal Deposit Insurance Corporation (FDIC); Joseph Otting, Comptroller, Office of the Comptroller of the Currency (OCC); and Randal Quarles, Vice Chairman of Supervision, Board of Governors of the Federal Reserve System. The Committee has released a very impressive Memorandum, which lays out the Frankenbank framework that exists in the United States today. For example, consider this one sentence from the Memorandum: “U.S. G-SIBs [Global Systemically Important Banks] made … Continue reading →

By Pam Martens and Russ Martens: May 15, 2019 ~ According to the Office of the Comptroller of the Currency (OCC), the regulator of national banks, as of December 31, 2018 JPMorgan Chase Bank NA (the Federally-insured bank backstopped by U.S. taxpayers) held $2,212,311,000,000 ($2.2 trillion) in equity derivatives. Equity is another name for stock. The OCC also reported that all commercial banks in the U.S. held a total of $3.374 trillion in equity derivatives at the end of last year, meaning that for some very strange reason, JPMorgan Chase holds a 65.5 percent market share of bank trading in this derivatives market. Those trillion dollar figures are notional amounts, meaning the face value. The OCC defines “notional” like this: “The notional amount of a derivative contract is a reference amount that determines contractual payments, but it is generally not an amount at risk. The credit risk in a derivative … Continue reading →

By Pam Martens and Russ Martens: May 14, 2019 ~ Allow us to set the stage for what happened in yesterday’s market rout which saw the Dow Jones Industrial Average shed 617 points. The easy answer is that the market is unnerved by the ongoing trade war between the Trump administration and China. And, clearly, that’s part of the problem. But the market is also keenly aware that there are a handful of mega banks on Wall Street that have monster exposure to derivatives and are systemically interconnected to the counterparties on the other side of those trades. The problem is that nobody, including the regulators, has clarity on which counterparty is in over their head and may have failed to reserve adequate capital if it has to pay out on too many losing derivative trades. That’s what happened in 2008 when a unit of the giant insurer, AIG, had … Continue reading →