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 →

By Pam Martens and Russ Martens: May 13, 2019 ~ The legal press has been having a field day with how the U.S. Department of Justice, funded by U.S. taxpayers to conduct its own serious and unbiased investigations, has been outsourcing its investigations to the criminal target and its outside counsel – specifically, the law firm Paul, Weiss, Rifkind, Wharton & Garrison. The case making the headlines involves Deutsche Bank. But another Paul Weiss internal investigation that has escaped meaningful scrutiny by mainstream media involves China Medical Technologies. The U.S. Department of Justice now describes this company as a massive securities fraud that dates back to the time that Paul Weiss conducted one of its internal investigations and came up empty-handed – or, at least, that’s what China Medical Technologies told the Securities and Exchange Commission in an official filing document. China Medical Technologies went public in the U.S. in … Continue reading →

By Pam Martens and Russ Martens: May 9, 2019 ~ Lawyers from Jones Day have been functioning like a Praetorian Guard around the president since the day he took office. How the firm landed so many of its partners into key positions in the Trump administration has baffled the media, especially since its partners were big supporters of Hillary Clinton’s campaign. According to Bloomberg News, Jones Day’s lawyers contributed $7,422 to Trump’s campaign while showering Hillary Clinton’s campaign with $267,899. Wall Street On Parade has previously reported that Jones Day lawyers in Trump’s White House Counsel office had previously represented Freedom Partners, the front group of Koch Industries, the giant fossil fuels company majority owned by the billionaire Koch brothers. Freedom Partners had quickly provided the Trump administration with a list of regulations it wanted gutted – like the Paris Climate accord (which Trump revoked on June 1, 2017) and numerous EPA rules. … Continue reading →

By Pam Martens and Russ Martens: May 8, 2019 ~  For years now, Wall Street On Parade has been pointing out to our readers that the Wall Street mega banks remain dangerously interconnected, despite the fact that those interconnections stopped banks from lending to one another in 2008; resulted in the largest government bailout of Wall Street in U.S. history; and ended up taking down the U.S. housing market and global economy. Whenever there is a major selloff in the broader stock market, the Wall Street mega banks typically bleed far more than the major stock indices. Yesterday, however, something curious and potentially noteworthy happened. The Dow Jones Industrial Average lost 473.3 points or 1.79 percent and the following Wall Street banks traded in line with that decline: JPMorgan Chase actually lost a little less than the Dow with a decline of 1.63 percent. Bank of America and Goldman Sachs … Continue reading →

By Pam Martens and Russ Martens: May 7, 2019 ~  If you needed more proof that the United States is heading in the direction of a dystopian authoritarian state, it arrived last Thursday, May 2, when the Chief Judge for the U.S. District Court for the Southern District of New York wrote a decision finding that the U.S. Justice Department had outsourced a criminal investigation to the target of the investigation – Deutsche Bank – and Deutsche Bank’s outside law firm, Paul, Weiss, Rifkind, Wharton & Garrison. Making the matter all the more interesting, the Chief Judge who wrote the decision, Colleen McMahon, formerly worked for Paul Weiss for 19 years, rising to the rank of partner. She remains, according to this profile, close friends with a number of former and current Paul Weiss lawyers. Judge McMahon’s takedown of the government’s cozy relationship with Deutsche Bank and Paul Weiss has … Continue reading →

By Pam Martens and Russ Martens: May 6, 2019 ~ In May 2012 when New York Times reporter Andrew Ross Sorkin wrote his severely factually-challenged analysis of whether the repeal of the Glass-Steagall Act had led to the Wall Street collapse in 2008, he seemed to have an agenda of undermining Elizabeth Warren, then running for her first U.S. Senate seat from Massachusetts, in her push to restore the Glass-Steagall Act. That legislation, which was formally known as the Banking Act of 1933, created Federal insurance on deposits held in commercial banks while barring those banks from being under the same roof with the Wall Street casino – that is, high risk securities underwriting and trading firms known as investment banks and broker-dealers. The legislation grew out of two intense years of Senate investigations from 1932-1934 which concluded that the “unsavory and unethical” practices by Wall Street securities trading firms … Continue reading →

By Pam Martens and Russ Martens: May 3, 2019 ~ During the question and answer period of Federal Reserve Chairman Jerome Powell’s press conference on Wednesday, Michael McKee of Bloomberg News asked the Chairman the following question: “I’m curious about the financial conditions that you see out there. The minutes of the March meeting tell us a few officials worried about financial stability risks. Was there a broader discussion at this meeting? Any consensus on whether such risks are growing as the markets hit new highs and we do see some instability in short-end trading. Is it possible that rates are too low at this point?” Powell answered the first part of the question as follows: “…I’d say that the headline really is that while there are some concerns around nonfinancial corporate debt, really the finding is that overall financial stability vulnerabilities are moderate on balance and, in addition, I … Continue reading →

By Pam Martens and Russ Martens: May 2, 2019 ~  There is a little noticed audio tape of an interview conducted on August 5, 2010 by investigators for the Financial Crisis Inquiry Commission (FCIC), a body convened under the Fraud Enforcement Recovery Act of 2009 to investigate the 2008 financial collapse on Wall Street. The interview is with Rodgin (Rodge) Cohen, Senior Chairman of Sullivan & Cromwell, the preeminent go-to lawyer on Wall Street. Cohen makes a number of eyebrow-raising admissions during his interview. First, in response to a question, Cohen concedes that he was personally involved in the amendment contained in the Federal Deposit Insurance Corporation Improvement Act (FDICIA) that changed the Fed’s emergency lending powers under Section 13(3) of the Federal Reserve Act. That one-sentence amendment to Section 13(3) was interpreted by the Federal Reserve from December 2007 to mid-2010 as giving it carte blanche to shovel $29 … Continue reading →

By Pam Martens and Russ Martens: May 1, 2019 ~ Could Bernanke, Paulson and Geithner have possibly picked a more self-serving title for their latest revisionist history of their secret $29 trillion bailout of the most insidiously corrupt industry in America? Their new book is titled Firefighting: The Financial Crisis and Its Lessons. Every municipal and volunteer firefighter in America should come together to file a class action lawsuit against the three for invoking an honorable profession in their dishonorable gambit to set Wall Street up for another obscene heads-we-win, tails-you-lose bailout. What the shameless trio – former Fed Chair Ben Bernanke; former Treasury Secretary under G.W. Bush and Ex-CEO of Goldman Sachs Hank Paulson; and former New York Fed President and Treasury Secretary under Obama, Tim Geithner – are up to is to provide cover for the Wall Street lobbyists who are trying to bully Congress into repealing the … Continue reading →