FDIC Data Contradicts Fed Chair Powell: Shows Real Estate Problems Have Skyrocketed at Largest U.S. Banks, Not  the Smaller Regionals

Jerome Powell (Thumbnail)

By Pam Martens and Russ Martens: March 11, 2024 ~ On Sunday, February 4, the CBS program 60 Minutes aired a taped interview with Federal Reserve Chairman Jerome Powell. The actual interview had occurred three days earlier and was conducted by 60 Minutes interviewer Scott Pelley. Two noteworthy things happened in connection with that interview: First, CBS did not indicate above the transcript of the interview that Powell’s comments had been materially shortened in the program that aired on TV; secondly, Powell calls the real estate problem at the largest banks “manageable” while shifting the more serious real estate loan problem to “smaller and regional banks.” Below is what Powell had to say about problem real estate loans at U.S. banks in the 60 Minutes’ interview. The bracketed bold text is what is in the transcript but did not air in the broadcasted program on television. (Scroll to 8 minutes and 20 … Continue reading

Senator Elizabeth Warren Calls Fed Chair Powell “Weak-Kneed”; Says He Is “Driving Efforts Inside the Fed” to Gut Higher Capital Requirements

Senator Elizabeth Warren Grilling Fed Chairman Jerome Powell at September 28, 2021 Senate Banking Hearing

By Pam Martens and Russ Martens: March 7, 2024 ~ Engaged Americans are watching in real time a replay of how Wall Street mega banks in 2008 created the worst financial collapse since the Great Depression, then used their campaign money and lobbying clout to intimidate Congress and the Obama administration into passing the pathetically watered down financial “reform” legislation known as Dodd-Frank in 2010. The Fed has been bailing out the mega banks’ excesses and casino style of banking ever since. The same dynamic is playing out today with the proposal by three federal banking regulators (the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency and the Federal Reserve) to strengthen the capital requirements on the 37 largest banks in the U.S. – less than one percent of all banks in the U.S. For important background on the capital proposal, see our reports below: The Fed … Continue reading

Steve Mnuchin, Trump’s Treasury Secretary/Foreclosure Kingpin, Joins with Hedge Fund Guys to Grab a Teetering, Federally-Insured Bank for $2 a Share

By Pam Martens and Russ Martens: March 7, 2024 ~ Former Trump Treasury Secretary, Steve Mnuchin, has teamed up with his pals from his days as a foreclosure kingpin at OneWest and assorted hedge funds/private equity guys, to pull a coup d’etat at the teetering New York Community Bancorp (NYCB), parent of Flagstar Bank. A press release from NYCB yesterday confirmed that Mnuchin and his pals would be injecting $1 billion in equity at a purchase price of $2 a share for NYCB, massively diluting existing shareholders whose share price on the last trading day of last year was $10.23. (For why shares of NYCB have been in free fall this year, see our report on Tuesday: New York Community Bancorp Was JPMorgan’s Top Regional Bank Pick for 2024; It’s Lost 73 Percent Y-T-D and Had Its Deposit Rating Downgraded to Junk.) Buttressing Mnuchin’s audacity, he will put himself and three of … Continue reading

Wall Street Mega Banks Have Created a Circular Firing Squad with Credit Derivatives and Capital Relief Trades – with the Fed’s Blessing

By Pam Martens and Russ Martens: March 6, 2024 ~ On June 11, 2015, the Office of Financial Research (OFR) released a sobering report on how banks were reducing their requirements to hold adequate capital against potential losses by engaging in non-transparent “capital relief trades” with potentially questionable counterparties. The OFR researchers summarized the problem as follows: “Capital relief transactions may have benefits to banks. But, even if real risk transfer is involved, these transactions can pose financial stability concerns by increasing interconnectedness, transforming credit risk into counterparty risk, and obscuring capital adequacy to investors and counterparties. And while bank supervisors have extensive data about banks, they may have less information about the nonbanks who are selling credit risk to those banks and ultimately bearing the risk of loss.” The Office of Financial Research was created under the Dodd-Frank financial reform legislation of 2010 to make sure that Wall Street mega banks … Continue reading

New York Community Bancorp Was JPMorgan’s Top Regional Bank Pick for 2024; It’s Lost 73 Percent Y-T-D and Had Its Deposit Rating Downgraded to Junk

By Pam Martens and Russ Martens: March 5, 2024 ~ New York Community Bancorp’s tumultuous share price descent began on January 31 when the bank filed an 8K form with the SEC indicating a $260 million net income loss in the fourth quarter; a dividend cut from 17 cents to 5 cents; and a $552 million provision for credit losses on commercial real estate. (Year-to-date, the company’s share price has lost 73 percent of its market value. Yesterday, its shares closed at $2.73, down 23 percent from the prior trading session on Friday, when the shares had lost 26 percent. ) Somehow, JPMorgan banking analyst Steven Alexopoulos was able to swat the gargantuan warning signs of January 31 away like a pesky gnat on an otherwise perfect day. On February 1, Alexopoulos penned a missive recommending that investors “take advantage of this valuation and accumulate shares on this weakness.” To drive home his … Continue reading

Watchdog, Better Markets, Investigates the Bank that Has Lost 65 Percent of Its Market Value in Two Months and Was Downgraded to Junk by Moody’s

Frightened Wall Street Trader

By Pam Martens and Russ Martens: March 4, 2024 ~ The widely respected banking and Wall Street watchdog, Better Markets, has a new report out on the latest teetering bank holding company, New York Community Bancorp (ticker NYCB). The title of the well-researched report pretty much says it all: “A Frankenstein Monster Federal Regulators Created.” NYCB has lost 65 percent of its stock market value year-to-date and was downgraded to a junk credit rating by Moody’s after the stock market closed on February 6. Moody’s wrote in its downgrade that a third of the bank’s deposits lack FDIC insurance. NYCB’s rapid share price descent began on January 31 when the bank filed an 8K form with the SEC indicating a $260 million net income loss in the fourth quarter; a dividend cut from 17 cents to 5 cents; and a $552 million provision for credit losses on commercial real estate – an area of … Continue reading

The Fed Pretends to Send a Warning to Wall Street’s Mega Banks on Derivatives and Counterparty Risk

Taming the Megabanks

By Pam Martens and Russ Martens: February 29, 2024 ~ On Tuesday, the Vice Chair for Supervision at the Federal Reserve, Michael Barr, delivered a speech at a risk management conference in Manhattan. Barr’s objective was to convince conference attendees that the Fed has its eye on the ball when it comes to Wall Street mega banks and their counterparties who are sitting on the opposite sides of derivative trades totaling tens of trillions of dollars. (Yes, trillions.) The most illuminating and dangerous elements of Barr’s speech are what he didn’t say. To remind attendees of what could happen if counterparty risks were not managed properly, Barr cited Long Term Capital Management (LTCM) and Archegos Capital Management. LTCM was a hedge fund stocked with the so-called “smartest men in the room,” including two Nobel laureates, who fed mathematical formulas into computers that generated trades using astronomical levels of leverage. Of course, this … Continue reading

$87 Million Buys This for Jamie Dimon: David Boies Can’t Utter the Words “JPMorgan Chase” in a Jeffrey Epstein Sex Trafficking Case

By Pam Martens and Russ Martens: February 27, 2024 ~ On Friday, February 16, ahead of a three-day weekend, JPMorgan Chase quietly filed its 10-K (annual report) with the Securities and Exchange Commission. The document carried the bombshell that the bank had paid an astonishing $1.4 billon in legal expenses in 2023 – a 426 percent increase over the prior year’s legal expenses. While the bank didn’t break down the names of the law firms that received the lion’s share of those legal expenses, public records can fill in most of the blanks. Throughout 2023, JPMorgan Chase was paying the expensive lawyers at WilmerHale to defend it against a federal lawsuit brought by the David Boies law firm, Boies, Schiller & Flexner LLP, on behalf of the raped, assaulted, and sex trafficked underage victims of Jeffrey Epstein. JPMorgan was also paying WilmerHale lawyers throughout 2023 to defend it against Epstein-related charges brought … Continue reading

Jamie Dimon and Nine of His Top Executives at JPMorgan Chase Have Dumped Over $150 Million of their JPMorgan Stock in Last Two Months

By Pam Martens and Russ Martens: February 26, 2024 ~ According to Form 4 filed with the Securities and Exchange Commission by corporate insiders, ten of the key executives at the largest bank in the United States, JPMorgan Chase, have dumped more than $150 million in common stock in the bank this year. The sales come as the bank’s stock has been hitting all time highs while the scandals at the bank are also hitting unprecedented levels. The largest seller by far was the Chairman and CEO of the bank, Jamie Dimon. According to his Form 4, on February 22 of this year, Dimon sold 737,420 shares of the bank’s common stock for $135 million. The newly promoted Troy Rohrbaugh, who is now Co-CEO of JPMorgan Chase’s Commercial and Investment Bank (CIB), sold 75,000 shares on February 22 of this year for $13.7 million. Stacey Friedman, General Counsel at the bank, sold … Continue reading

These Charts Reveal Why the Fed Is Frightened about Capital Levels at the Wall Street Mega Banks

Federal Reserve Building in Washington, D.C.

By Pam Martens and Russ Martens: February 22, 2024 ~ According to Federal Reserve data dating back to July 3, 1985 – a span of close to 39 years – there has not been a time when the largest 25 banks were bleeding deposits on the scale that has been happening for the past 22 months. There has also never been a time comparable to the last 22 months when the largest 25 banks were bleeding deposits while the smaller banks were growing deposits. (See the chart above.) To get our minds around today’s situation, we made another chart using Federal Reserve data dating back to 1998 – the year before the Glass-Steagall Act was repealed. It shows that the ratio of deposits of the 25 largest banks to the smaller banks stood at 3 times in 1998 and has shrunk to its lowest level of 2.03 times as of February 7 … Continue reading