Search Results for: Federal Reserve

By Pam Martens and Russ Martens: November 30, 2023 ~ The Office of Financial Research (OFR) is a unit of the U.S. Treasury Department. OFR was created as part of the Dodd-Frank financial reform legislation of 2010 to keep the Financial Stability Oversight Council (F-SOC) informed about emerging threats that have the potential to spread contagion throughout the U.S. financial system — as occurred in 2008 in the worst financial crash since the Great Depression. Janet Yellen, the U.S. Treasury Secretary, chairs F-SOC. Its members include the heads of every federal banking and Wall Street regulator, who meet regularly to assess any threats on the horizon that could lead to financial instability in the U.S. One of the data charts that OFR makes available both to F-SOC and the public to assess accelerating financial problems is its Financial Stress Index. OFR describes that index as follows: “The OFR Financial Stress Index … Continue reading →

By Pam Martens and Russ Martens: November 29, 2023 ~ The employee at Apple who was put in charge of conducting due diligence on aligning the Apple credit card brand with Goldman Sachs, needs to be immediately demoted to sorting envelopes in the mail room. It has been a match made in hell, generating headlines in the business press over the billions of dollars Goldman Sachs has lost attempting to ramp up a credit card division from scratch while spawning federal investigations into Goldman’s less than timely handling of credit card customer complaints about fraudulent charges, billing errors, refunds, etc. After hundreds of those complaints piled up at the Consumer Financial Protection Bureau (CFPB), the Bureau opened a federal investigation. (The CFPB is the federal agency created to hear directly from defrauded consumers following the 2008 Wall Street-generated financial crisis). In the most recent quarterly report filed by Goldman with the … Continue reading →

By Pam Martens and Russ Martens: November 28, 2023 ~ FRED is a giant online database at the St. Louis Fed that allows anyone to graph the financial and economic data stored in its repositories. We use the data regularly to bring our readers a crystal-clear snapshot of the increasingly dangerous underpinnings of the U.S. financial system. Let’s start with the first chart above. This chart depicts the cash assets held by the 25 largest U.S. commercial banks. The Fed defines the term “cash assets” as “vault cash, cash items in process of collection, balances due from depository institutions, and balances due from Federal Reserve Banks.” Notice that from April 1, 1985 to just before the financial crash of 2008, cash levels at the biggest banks were as steady as a soft breeze on a spring day. But from that point on through today, there have been freakish spikes and plunges … Continue reading →

By Pam Martens and Russ Martens: November 27, 2023 ~ The formidable Washington watchdog, Public Citizen, has trained its sights on JPMorgan Chase, Jamie Dimon’s house of serial frauds and felony counts that is allowed to also operate as the largest federally-insured bank in the United States. Public Citizen’s pursuit of JPMorgan Chase began in 2019 when its Energy Program Director, Tyson Slocum, began investigating a hodge podge of private equity shell companies using the name Infrastructure Investments Fund (IIF). At the time, IIF was in the process of buying El Paso Electric and Public Citizen smelled something rotten and started digging. Public Citizen concluded that JPMorgan Chase was controlling IIF. Public Citizen then filed a series of complaints in the matter with the Federal Energy Regulatory Commission (FERC). FERC is not a federal agency that JPMorgan Chase should be riling up again. In 2013, FERC fined the bank $410 million … Continue reading →

By Pam Martens and Russ Martens: November 22, 2023 ~ The biggest banks in the U.S. that have been serially bailed out by the Federal Reserve since they blew up the financial system in 2008, are ripping mad at the Chairman of the Federal Deposit Insurance Corporation (FDIC), Martin Gruenberg. In addition to the FDIC and other federal banking regulators’ proposed rule to increase capital requirements on the largest banks, the FDIC just issued a final rule on November 16 that will force six banks to report an FDIC special assessment expense totaling more than $9.3 billion in the final quarter of this year. (See chart above.) Jamie Dimon, Chairman and CEO of JPMorgan Chase, is hair-on-fire mad because his bank is getting hit with the whopping figure of approximately $3 billion according to the firm’s most recent quarterly filing (10-Q) with the SEC. The most recent 10-Q filings with the … Continue reading →

By Pam Martens and Russ Martens: November 14, 2023 ~ Today, the U.S. Senate Banking Committee will call federal banking regulators before it to testify at a hearing at 10 a.m. The underlying theme will be why these regulators were caught napping when the second, third, and fourth largest bank failures in U.S. history occurred in a span of seven weeks this past Spring and hear about the new plans of action to restore confidence in the U.S. banking system. One of the regulators testifying will be the soft-spoken Martin Gruenberg, Chairman of the Federal Deposit Insurance Corporation (FDIC), the federal agency that insures the deposits at federally-insured U.S. banks up to $250,000 per depositor, per bank, as long as the branch is located on U.S. soil. (Deposits at foreign branches of U.S. banks are not insured by the FDIC.) In his written remarks for today’s hearing (which were released early), … Continue reading →

By Pam Martens and Russ Martens: November 7, 2023 ~ On the first day of trading in January 2007 (the year prior to the Wall Street financial crisis in 2008 that saw century-old iconic financial firms explode one after another), Citigroup closed the trading day at $55.25. Yesterday, Citigroup’s common stock closed at an effective share price of $4.20. Citigroup did a 1-for-10 reverse stock split on May 9, 2011. That means that investors holding 100 shares of Citigroup back in January 2007 saw their position shrink to 10 shares after May 9, 2011. So yesterday’s closing price of $42.04 for Citigroup is effectively $4.20 for long-term shareholders, adjusting it for the reverse stock split. To put that in even starker terms, investors who have held onto this dog for almost 17 years have watched 92 percent of its share price vanish. More dire news on Citigroup came yesterday with a … Continue reading →

By Pam Martens and Russ Martens: October 31, 2023 ~ To understand how truly bizarre and alarming the trading scandal case involving former Dallas Fed President Robert Kaplan is, some important background is necessary: Kaplan didn’t just trade in and out of stocks while a voting member of the interest-rate setting committee of the Fed (known as the Federal Open Markets Committee or FOMC); Kaplan also traded in and out of $1 million+ lots of S&P 500 futures. That is astonishing; unprecedented; and lacks any viable justification for a sitting Fed official.  (See Kaplan’s financial disclosure forms from 2015 through 2020 while employed at the Dallas Fed.) Kaplan resigned from the Dallas Fed in September 2021, the same month that the trading scandal went viral in the news. S&P 500 futures allow an individual to trade almost around the clock from Sunday evening to Friday evening, unlike stock exchanges in the U.S. … Continue reading →

By Pam Martens and Russ Martens: October 24, 2023 ~ The Dow Jones Industrial Average of 30 big-cap stocks closed out last year on Friday, December 30, 2022 at 33,147.25. After setting a year-to-date low of 31,819.14 on March 13 of this year during the banking crisis (a negligible decline of 4 percent year-to-date), the Dow climbed its way back to a year-to-date high of 35,630.68 on August 1. Since then, the Dow has been setting sharply lower lows – a sign of deterioration in its components. The Dow again went negative year-to-date last Friday, October 20, closing at 33,127.28. Equally notable, 20 components of the Dow 30, or two-thirds of the components, were negative year-to-date as of the close yesterday, October 23. Ten of the Dow’s components were down by double-digits year-to-date, through October 23. (See chart below.) The Dow index reading would be looking far worse were it not for … Continue reading →

By Pam Martens and Russ Martens: October 24, 2023 ~ Last Friday, the Federal Reserve published its Financial Stability Report, which takes a detailed look at U.S. financial stability through the second quarter of this year. Although the Fed does its best to put a rosy glow on the outlook, it’s not a pretty picture. We found the most disturbing sentence in the report to be the following: “Overall, estimated runnable money-like financial liabilities increased 3.4 percent to $20.3 trillion (75 percent of nominal GDP) over the past year.” Given that a handful of banks this past spring, with combined liabilities of less than $1 trillion, caused a full blown banking panic and bank runs, the Fed’s figure of $20.3 trillion of “runnable” money is not a comforting thought. The Fed elaborates as follows: “The banking industry maintained a high level of liquidity overall, but some banks continued to face funding pressures; meanwhile, structural vulnerabilities … Continue reading →