Congress Passed Legislation Making the Treasury Secretary the Boss of the Federal Reserve During a Financial Crisis: That’s Creating Its Own Crisis

U.S. Treasury Secretary Steve Mnuchin (Thumb Print)

By Pam Martens and Russ Martens: December 28, 2020 ~ Following the financial crisis of 2007 to 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law on July 21, 2010. At the time, Democrats controlled both houses of Congress and could have put teeth into the law, had they chosen to do so. The Act did not reform Wall Street nor did it protect American consumers from the looting practices of the Wall Street banks. Dodd-Frank allowed Wall Street’s private justice system to continue, where both customers and employees must waive their rights to bring claims in a court of law; it allowed Wall Street banks to continue using depositors’ money to make wild gambles in derivatives; it permitted Wall Street banks to continue buying triple-A credit ratings from the ratings agencies for dodgy securitized products; it allowed the very same banks that blew … Continue reading

Bloomberg News Attempts to Capture the “Speculative Frenzy” of Today’s Markets; Here’s the Key Stuff It Missed

Bubbles

By Pam Martens and Russ Martens: December 24, 2020 ~ Merry Christmas Eve 2020 and welcome to a rerun of the roaring 20s, complete with one-termer President Herbert Hoover in the White House, Wall Street running wild with unchecked corruption, and unprecedented income inequality. On Saturday, Bloomberg News attempted to outline the key components of markets gone bonkers “in this year of death, disease and economic calamity,” writing that the “Mania is laid bare in IPO surge, options boom and crypto fever.” In fairness, the nine reporters who worked on the story, none of whom received a byline but are noted at the bottom of the article, correctly compiled the observable earmarks of this bubble market. But they failed to dig into the dark underbelly of how we got here. Let’s start with the compromised Wall Street regulators in Washington. The Chair of the Securities and Exchange Commission, Jay Clayton, … Continue reading

Stimulus Bill’s “Pathetic” $600 Checks and Pork Giveaways Are Savaged on Social Media; Trump, Belatedly, Demands Bigger Checks

Piggy Bank Thumbnail

President Donald Trump has finally emerged from his consultations on the possibility of retaining the White House by declaring martial law to weigh in on the pandemic relief and appropriations bill that was passed by both houses of Congress and awaiting his signature to become law. Instead of speaking out before 510 members of Congress voted on the sprawling 5,593 page document, Trump waited until last night to post a video on his Twitter page in which he demands that the $600 stimulus checks in the bill be increased and pork removed. In the video, Trump cited some of the very same foreign loans and pork items that have been savaged on social media over the past two days. (See Tweets below.) Trump finished up the video with this: “Congress found plenty of money for foreign countries, lobbyists and special interests while sending the bare minimum to the American people … Continue reading

The Language Toomey Inserted into the Stimulus Bill Enshrines a $681 Billion Trading Slush Fund for Mnuchin with the NY Fed

By Pam Martens and Russ Martens: December 22, 2020 ~ The language that Republican Senator Pat Toomey inserted into the final stimulus bill (Consolidated Appropriations Act, 2021) appears below. It not only restricts the Federal Reserve’s ability to extend some of its current emergency lending programs that help small and medium size businesses and state and local governments beyond December 31 of this year (while leaving Wall Street bailout programs alive for at least another 90 days) but it also enshrines the autonomy of the U.S. Treasury Secretary to operate a massive slush fund – the Exchange Stabilization Fund (ESF). Most Americans have never heard of the Treasury’s Exchange Stabilization Fund. It was created in 1934 to provide support to the U.S. dollar during the Great Depression. The ESF has grown from $94.3 billion in assets prior to Trump taking office to a balance of $681 billion as of October 31, 2020. As recently … Continue reading

Research Arm of Congress Confirms that Mnuchin Never Released Bulk of CARES Act Money Earmarked for Fed’s Emergency Loans

Senator Pat Toomey

By Pam Martens and Russ Martens: December 21, 2020 ~ On November 27, Wall Street On Parade reported that U.S. Treasury Secretary Steve Mnuchin had failed to turn over to the Federal Reserve 75 percent of the $454 billion that Congress had earmarked in the CARES Act for the Fed’s emergency lending programs. We wrote at the time: “…for months now, the Federal Reserve’s weekly financial statements known as the H.4.1 have indicated that all the Fed received from Treasury for its emergency lending facilities was $114 billion, leaving $340 billion unaccounted for.” We also took the time to send an email to the Federal Reserve’s press office to confirm that the Fed had received only the $114 billion from the Treasury for its emergency lending programs. They directed us to Fed public documents confirming this. Now the Congressional Research Service (CRS), a century old nonpartisan agency that provides legal … Continue reading

Race to Control U.S. Senate: “Georgians for Kelly Loeffler” Campaign Committee Packed with NY and CA Trading Firm Billionaires

By Pam Martens and Russ Martens: December 18, 2020 ~ As most folks know, the fate of the Biden administration, the fate of the nation, and the future of millions of Americans about to become homeless through foreclosures, evictions and their businesses shuttering as a result of the pandemic – thus creating lots of distressed real estate debt for hedge funds and Wall Street speculators to scoop up on the cheap – hangs on the outcome of two U.S. Senate races in Georgia slated for January 5. Those January runoff elections in Georgia resulted from the outcome of the November 3 election when incumbent Republican Senators David Perdue and Kelly Loeffler (who was appointed to her Senate seat by Georgia Governor Ben Kemp) failed to get more than 50 percent of the vote. The two candidates are now facing tight races against their Democratic challengers in Georgia. Perdue is facing … Continue reading

Fed Chair Powell Opens a Big Can of Worms at His Press Conference

Federal Reserve Chairman Jerome Powell

By Pam Martens and Russ Martens: December 17, 2020 ~ There was a jaw-dropping exchange between Politico reporter Victoria Guida and Fed Chair Jerome Powell at his press conference yesterday following the two-day meeting of the Fed’s Federal Open Market Committee (FOMC). Powell first acknowledged in his opening statement that “the current economic downturn is the most severe of our lifetimes.” But he then proceeds to tell Guida that the Fed has given no thought at all to what kind of emergency lending it might engage in under the incoming Biden administration. Treasury Secretary Steve Mnuchin has kneecapped the Fed’s existing emergency loan facilities by demanding that the Fed return the Treasury’s unused money that is backstopping these facilities as loss-absorbing capital. The Fed has for years attempted to reassure markets that there will be no surprises from the Fed; that it will be providing lots of forward guidance to … Continue reading

The Sabotage of the U.S. Postal Service Is a National Security Matter

Louis Dejoy, Postmaster General

By Pam Martens: December 16, 2020 ~ Among the growing list of priorities for the incoming Biden administration is a comprehensive investigation of the efforts to sabotage the U.S. Postal Service. In August, Aaron Gordon, reporting for Vice’s Motherboard, published a leaked internal document from the U.S. Postal Service showing that management was planning to eliminate hundreds of high-speed sorting machines in the midst of a pandemic. Sources inside the Postal Service that spoke with Gordon told him that they had “personally witnessed the machines, which cost millions of dollars, being destroyed or thrown in the dumpster.” Documents reviewed by Gordon also “laid out detailed plans to reroute mail to sorting facilities further away in order to centralize mail processing even if it moves the mail across further distances.” Gordon reported that a union official wrote on the document: “This will slow mail processing.” When this news swept across mainstream … Continue reading

Compared to the Last Three Treasury Secretaries, Janet Yellen Is Mother Teresa

By Pam Martens and Russ Martens: December 15, 2020 ~ President-elect Joe Biden’s nomination of Janet Yellen as Treasury Secretary is being viewed cautiously in some progressive circles. As the post-financial crisis Chair of the Federal Reserve under President Obama, Yellen had the opportunity to interpret the rules of the Dodd-Frank financial reform legislation in a manner that would rein in the risks of the mega banks on Wall Street. She failed in that regard while attempting to reassure a skeptical public that the Fed’s stress tests on the banks were adequate to prevent another crisis. Yellen famously stated at a London conference in 2017 the following: “Would I say there will never, ever be another financial crisis? You know probably that would be going too far, but I do think we are much safer, and I hope that it will not be in our lifetimes and I don’t believe … Continue reading

Trump Regulator Set to Consider Approving the Banking Model that Ushered in the Great Depression – Uninsured Deposits

By Pam Martens and Russ Martens: December 14, 2020 ~ Seven banking and credit union associations have sent a letter to the Office of the Comptroller of the Currency (OCC), the regulator of national banks in the U.S., spelling out the dangers of the OCC approving a pending bank charter that would allow a national bank to accept and hold deposits that lack federal deposit insurance. The lack of federal deposit insurance triggered the bank runs and banks collapses that played a key role in ushering in the Great Depression. (More on that in a moment.) The bank making the proposal for uninsured banking is Figure Bank, N.A., part of the blockchain startup, Figure Technologies. The organizations wisely arguing against it are the American Bankers Association, Bank Policy Institute, Credit Union National Association, Independent Community Bankers of America, National Association of Federally Insured Credit Unions, The Clearing House, and Consumer … Continue reading

Mission Creep or Creepy Mission: The New York Fed’s Trading Desk Has Ballooned to $6.59 Trillion Today from $576 Billion in 2008

Trader on New York Fed Trading Desk (Thumbnail)

By Pam Martens and Russ Martens: December 11, 2020 ~ Few Americans are aware that the central bank of the United States, the Federal Reserve, has its own trading desk in New York that interacts every business day with the trading desks of the giant Wall Street banks. When Americans think of massive trading operations, names like JPMorgan, Goldman Sachs, Morgan Stanley, UBS and Citigroup come to mind. But if we measure trading desks by the value of their portfolio holdings, these global banks are pikers compared to the Fed’s trading desk, operated by one of its 12 private regional banks, the Federal Reserve Bank of New York (New York Fed). Using the New York Fed’s own annual reports to obtain the data, we can report that the New York Fed’s Trading Desk has grown from $576 billion in holdings of domestic securities as of December 31, 2008 (at the … Continue reading

The SEC Has a Graph of the Wall Street Short-Term Loan Market that Blew Up: It Needs a Surgeon General Warning Before Viewing

Short-Term Funding Market (Thumbnail)

By Pam Martens and Russ Martens: December 10, 2020 ~ If you suffer from chronic nightmares, experience migraine headaches from stress, or have anger management issues when confronted with abject stupidity, you probably want to avoid looking at the above graph that the Securities and Exchange Commission has created to show how one of the most critical financial markets in the United States functions. Or perhaps we should say, why it’s incapable of functioning when it’s most needed. The market is Wall Street’s Short-Term Funding Market which includes its integral repurchase agreement (repo) market. The repo market blew up in 2008 during the last financial crisis and required a Fed bailout. It blew up again on September 17, 2019 for reasons that have yet to be credibly explained and required at least $9 trillion in cumulative emergency loans from the Federal Reserve over the next six months. As we reported … Continue reading

Watchdog Report: Fed’s Billions in Emergency Repo Loans to Wall Street Didn’t Go Away in June; They Just Went Dark

Federal Reserve Chair Jerome Powell

By Pam Martens and Russ Martens: December 9, 2020 ~ The U.S. Senate Banking Committee, the House Financial Services Committee, and the U.S. mainstream business media now thoroughly qualify as the dumb tourists snapping photos of the raging bull statue on Wall Street as the Wall Street banks loot the country for the second time in a decade. Last Thursday the Financial Stability Oversight Council (pronounced F-SOC) released its 2020 Annual Report. Those tend to be tediously boring reports that tell one nothing meaningful about the true state of the Wall Street mega banks, so we just got around to perusing the document yesterday. Mixed in with the typical snooze-worthy minutiae was a bombshell that made us sit up straight in our chair. Those cumulative repo loans totaling more than $9 trillion to the trading houses on Wall Street that the Fed had been making from September 17 of 2019 … Continue reading

Bull Market? Had Three Dow Stocks Not Been Removed in August, 43 Percent of Dow Stocks Would be Negative Year-to-Date

By Pam Martens and Russ Martens: December 8, 2020 ~ There has been a lot of bullish talk about the Dow Jones Industrial Average reaching 30,000 for the first time in history. But the underpinnings of the bellwether Dow index look a lot less rosy. Replacing three of the Dow Jones Industrial Average stocks on August 31 looked like a desperate move by S&P Dow Jones Indices, the folks that oversee that stock index. One of the stocks replaced, Exxon Mobil, had been a Dow component for 92 years, joining the Dow in 1928 under the name Standard Oil of New Jersey. Exxon was replaced with Salesforce, a company that only went public in 2004. Salesforce describes itself as a “customer relationship management platform,” explaining that “We help your marketing, sales, commerce, service and IT teams work as one from anywhere — so you can keep your customers happy everywhere.” … Continue reading

What’s in Your Wallet? A Credit Card that Profits from the Rape of Children?

Nicholas Kristof

By Pam Martens: December 7, 2020 ~ The New York Times columnist and two-time Pulitzer winner, Nicholas Kristof, has managed to do in one column what Canada, the U.S. Department of Justice, Visa and Mastercard have failed to do: send a strong message that profiting from the rape of children will result in dire consequences. At 7:06 a.m. on Friday, Kristof Tweeted this: “I’ve spent the last few months reporting this piece about Pornhub. What most people don’t realize is that it’s infested with rape videos. I talked to child trafficking survivors whose rape videos the company had distributed and monetized. Unconscionable.” “Unconscionable” is a peculiar word to use given the breadth of Kristof’s article. If monetizing the rape of children isn’t criminal in the U.S. and Canada, we’re living in a sicker era than any of us have imagined. (Pornhub, a video website accessible on the internet, is owned … Continue reading