By Pam Martens and Russ Martens: May 12, 2016 We’ve been at the gym recently working off those pounds that come from spending too much time in a chair researching the serial crimes on Wall Street. The equipment at the gym is conveniently equipped with cable news and a commercial that is airing regularly on the business news channel, CNBC, caught our eye. The commercial starts out like this: “The power of 100 of the world’s top companies. The power of a proven 15-year track record.” We were first inclined to giggle at a market index claiming a “15-year” track record. The Dow Jones Industrial Average, another stock market index, has been around since May 26, 1896 – a potentially more meaningful 120 years. The web site for the PowerShares QQQ, the subject of the commercial, explains that it’s an Exchange Traded Fund (ETF) based on the Nasdaq-100 Index, noting … Continue reading →

By Pam Martens and Russ Martens: May 11, 2016  A new report from the Government Accountability Office (GAO), the nonpartisan investigative arm of Congress, shows that Black workers experienced devastating declines in their defined contribution plan balances (mostly 401(k) plans) between 2007 and 2013 – an experience not shared by White workers. According to the GAO, Black working households’ median 401(k) balance declined by a stunning 47 percent between 2007 to 2013, the latest date for which data is available. The median balance for Black working households in 2007 stood at $31,100 versus $16,400 in 2013. To put that 47 percent decline into sharper focus, the GAO found that the 401(k) balance for White working households “did not change significantly over the same period.” That isn’t actually good news for White workers either since they were likely making regular contributions to their 401(k) plans while the account value went nowhere. … Continue reading →

By Pam Martens and Russ Martens: May 10, 2016  On May 1, William Dudley, the President of the New York Fed delivered a speech to the Atlanta Fed’s 2016 Financial Markets Conference.  Dudley, who was previously hauled before Congress to examine his Wall Street cronyism, spent two-thirds of his talk meandering around the academic nuances of liquidity in a stressed market and then zeroed in for the kill. Dudley wants to extend the powers of the Federal Reserve as the lender of last resort beyond just banks to (wait for it) include broker-dealer stock trading operations. Under that scenario, Bernie Madoff’s market-making operation (that was also a fraud according to the Madoff Trustee Irving Picard) might have been borrowing from the Fed during the crisis of 2008. Maybe Madoff could have even borrowed enough from the Fed to still be operating. Dudley’s exact words from the speech posted at the … Continue reading →

By Pam Martens and Russ Martens: May 9, 2016 The U.S. is now in its eighth year since the Wall Street bank collapse of 2008 and most members of the general public believe the bailouts are long finished. That’s a fallacy. Last Friday, the Government Accountability Office (GAO) released a report showing that there are 16 banks still involved in the original bailout program – one of which, First Bancorp, owes the government $124.97 million or 49 percent of the funds owed by the other 15 banks combined. First Bancorp continues to trade on the New York Stock Exchange under the stock symbol, FBP. The common stock of First Bancorp has declined from over $150 a share in 2009 to close last Friday at $3.72. According to the company’s 10K filed with the Securities and Exchange Commission for year-end December 31, 2015, the U.S. government still owned 4.8 percent of … Continue reading →

By Pam Martens and Russ Martens: May 6, 2016  Today marks the sixth anniversary of the confidence-draining “Flash Crash” of May 6, 2010 when the Dow Jones Industrial Average briefly plunged 998 points, with hundreds of stocks momentarily losing 60 percent or more of their share price. The public was promised a credible investigation. It never materialized because, for one thing, there was no Consolidated Audit Trail (CAT) to enable regulators to pinpoint exactly which securities firms were gaming the system. The public was then promised a Consolidated Audit Trail. But six long years and many smaller Flash Crashes later, there is still no Consolidated Audit Trail. The public was also promised an in-depth investigation by Congress into the role that high frequency trading is playing in our markets. That hasn’t happened either. Instead, the stock exchanges are still deeply in bed with the high frequency traders. As for the … Continue reading →

By Pam Martens and Russ Martens: May 4, 2016 Yesterday, the Federal Reserve held a public board meeting to propose two new Byzantine rules to prevent another 2008-style financial contagion on Wall Street and potential crash of the U.S. economy. Unfortunately, the details brought images of the curtain scene from the Wizard of Oz. If you looked beyond the copious verbiage, there didn’t seem to be much there, there. Both plans appeared to target concerns over derivatives. Coincidentally, Freddie Mac, already a ward of the government as a result of the 2008 crash and a derivatives counterparty to some of Wall Street’s largest banks, reported yesterday that it had lost $4.56 billion in its derivatives portfolio in just the first three months of this year. Derivative losses were an early precursor to the 2008 crash. The first proposal mapped out by the Fed is called the Net Stable Funding Ratio … Continue reading →

By Pam Martens and Russ Martens: May 4, 2016  Last evening, Senator Ted Cruz of Texas withdrew from the Republican Presidential race, leaving Donald Trump the presumptive nominee following a large margin of victory for Trump in the Indiana primary. That reality triggered a front page cover today at the New York Daily News with an obituary for the Republican Party. Presidential candidate Senator Bernie Sanders has been anticipating Trump’s success for months and pointing out, time and again, that national poll after national poll shows Sanders to be the much stronger contender in a general election against Trump. (Sanders won the Indiana primary yesterday with a 52.5 percent victory over Hillary Clinton’s 47.5 percent share of the vote.) In a speech to the National Press Club on May 1, Sanders explained his strategy heading into the Democratic Convention on July 25-28 in Philadelphia (see video below). His written remarks … Continue reading →

By Pam Martens and Russ Martens: May 3, 2016  On April 21, Wall Street On Parade reported that the U.S. government (also known as the U.S. taxpayer) was on the hook for potentially tens of billions of dollars in derivative losses at Freddie Mac and Fannie Mae – the two companies the government put under conservatorship during the Wall Street financial collapse of 2008. (See related article below.) This morning, Freddie Mac is adding further angst to this potential derivatives blowup scenario by reporting that it lost $4.56 billion in its derivatives portfolio in just the first three months of this year – a stunning 90 percent increase over what it lost in derivatives in the first quarter of 2015. That brings its derivative losses for all of 2014, 2015 and the first quarter of 2016 to $15.54 billion. (See chart below.) This is certain to bring gasps from some … Continue reading →

By Pam Martens: May 2, 2016 Speaking of the Wall Street and global banks that populate London’s financial district, John Mann, a Member of Parliament, asked the rhetorical question at a Treasury Select Committee hearing on February 4, 2014: “Have we or have we not just had the biggest series of quantifiable wrongdoing in the history of our financial services industry?…Is there any other industry in recorded history in this country who’s had a comparable level of quantifiable wrongdoing to your knowledge?” The answer, of course, is that there is no other industry on either side of the pond that has inflicted as much economic pain as Wall Street through “quantifiable wrongdoing.” And yet, the U.S. government continues to allow this serially crime-infested industry to run its own private justice system where both its customers and its employees are barred from taking their lawsuits into a court of law so … Continue reading →

By Pam Martens and Russ Martens: April 29, 2016 Bloomberg L.P., majority owned by billionaire Michael Bloomberg, with a net worth of $45.3 billion according to Forbes, has today outed the anonymous writers responsible for the popular financial blog, Zero Hedge, a competitor to Bloomberg L.P.’s financial web site. Raising eyebrows in journalism circles, Bloomberg’s reporters obtained the text of internal chat sessions at Zero Hedge which contained strategies for building traffic at the site. To some, that raises alarms of obtaining trade secrets – an issue over which Wall Street firms have sought, and received, criminal prosecutions. Also noteworthy, the article’s authors, Tracy Alloway and Luke Kawa, seem to take aim at the financial comfort of the people behind the blog, while failing to mention that their boss is the 8th richest person in the world, whose wealth intricately derives from the industry they cover. During Michael Bloomberg’s 12 … Continue reading →