Search Results for: size of fed portfolio

By Pam Martens and Russ Martens: September 25, 2022 ~ The corrupt political backdrop for today’s unprecedented market quagmire feels like a hyperbolic trailer for a low-budget sci-fi thriller: The former president of the only remaining superpower in the world has been charged with “staggering” frauds against banks – the ones he just deregulated as president. (This same former president was also caught red-handed with Top Secret documents after he left public office — but the super power’s 18 intelligence agencies have no idea what he did, or was planning to do, with these documents.) On the other side of the globe, the sitting president of a bygone superpower is engaging in nuclear saber-rattling and conscripting 60-year-old men to fight an illegal war while young, able-bodied men flee the country en masse. The world’s financial markets have gone off the rails in an equally disorienting fashion. The central bankers that had … Continue reading →

By Pam Martens and Russ Martens: June 22, 2022 ~ The Consumer Financial Protection Bureau (CFPB) is the federal agency that was created under the Dodd-Frank Act of 2010 in response to Wall Street’s harrowing abuses to average Americans in the leadup to the financial crash of 2008. One of its key benefits is that it has a complaint database where consumers can post their complaints to the agency, and the general public and reporters can read those complaints on a public website. The general public benefits by seeing what types of complaints are being made against a financial institution they might be considering doing business with and reporters can look for dangerous patterns that are emerging. We delved into a specific area of complaints at the CFPB yesterday. We put the word “Bitcoin” into the search box and pulled up 1,031 matches. Next we searched under the word “crypto” and … Continue reading →

By Pam Martens and Russ Martens: June 6, 2022 ~ Last month the Federal Reserve Bank of New York released its 2021 annual report from its “Markets Group.” That’s the group that operates a trading floor (complete with speed dials to the trading houses on Wall Street) at the New York Fed, located not far from the New York Stock Exchange, as well as another trading floor on the premises of the Chicago Fed, which is not far from the futures exchanges in Chicago. That report showed that despite all of the recent talk about the Fed dramatically shrinking its balance sheet from its current size of $8.9 trillion, the internal Federal Reserve plan for the balance sheet is actually this: “After declining by about $2.5 trillion from the peak size reached in the first half of 2022, the portfolio stops declining in mid-2025, at which point it is held constant … Continue reading →

By Pam Martens and Russ Martens: May 12, 2022 ~ Yesterday, Thomas Falk and Claudia Aguirre, who were co-chairing the Dallas Fed’s Search Committee, announced that they had found the ideal candidate to become the new Dallas Fed President. They said it was a person who would “understand the economic issues and needs of the residents of Texas, northern Louisiana and southern New Mexico,” the areas served by the Dallas Fed. Given that criteria, one might have suspected that their candidate would have some relationship with Texas or its neighboring states. But no. Falk and Aguirre selected a person who works 1500 miles from the Dallas Fed, Lorie Logan, the head of the trading desks for the New York Fed, the only one of the 12 regional Fed banks to have trading desks (one in New York near the New York Stock Exchange and one in Chicago near the futures exchange). … Continue reading →

By Pam Martens and Russ Martens: November 17, 2021 ~ We recently read the report conducted by the Special Committee of the Board of Directors of Credit Suisse into how the bank had lost $5.5 billion when the Archegos family office hedge fund that was being financed by Credit Suisse and other Wall Street firms blew itself up this past March. One paragraph in particular caught our attention: “The Archegos-related losses sustained by CS are the result of a fundamental failure of management and controls in CS’s Investment Bank and, specifically, in its Prime Services business. The business was focused on maximizing short-term profits and failed to rein in and, indeed, enabled Archegos’s voracious risk-taking. There were numerous warning signals—including large, persistent limit breaches—indicating that Archegos’s concentrated, volatile, and severely under-margined swap positions posed potentially catastrophic risk to CS. Yet the business, from the in-business risk managers to the Global Head … Continue reading →

Pam Martens and Russ Martens: October 26, 2021 This month, the Vanderbilt Law Review published a 69-page paper by Saule Omarova, President Biden’s nominee to head the Office of the Comptroller of the Currency (OCC), the Federal regulator of the largest banks in the country that operate across state lines. The paper is titled “The People’s Ledger: How to Democratize Money and Finance the Economy.” The paper, in all seriousness, proposes the following: (1) Moving all commercial bank deposits from commercial banks to so-called FedAccounts at the Federal Reserve; (2) Allowing the Fed, in “extreme and rare circumstances, when the Fed is unable to control inflation by raising interest rates,” to confiscate deposits from these FedAccounts in order to tighten monetary policy; (3) Allowing the most Wall Street-conflicted regional Fed bank in the country, the New York Fed, when there are “rises in market value at rates suggestive of a … Continue reading →

Pam Martens and Russ Martens: October 21, 2021 ~ Last year, during the financial crisis, Fed Chairman Jerome Powell held five confidential phone calls with BlackRock’s Chairman and CEO Larry Fink. The first call on March 19 lasted 30 minutes; there were two calls in April, one on April 3 and one on April 9, both lasting 15 minutes. A phone call between Powell and Fink on May 13 lasted 30 minutes; and one on November 20 lasted 10 minutes. That’s a total of 100 minutes that the Chairman of the central bank of the United States spent on the phone with the man who heads the company that is also managing a large portion of Powell’s wealth through its iShares Exchange Traded Funds. The dates and times of the phone calls come from Powell’s publicly-released daily calendars. Powell’s phone calls with Fink continued this year. On February 5, Powell held … Continue reading →

By Pam Martens and Russ Martens: October 11, 2021 ~ Regulation U is a 1936 Federal Reserve rule, that is still in force today, that allows federally-insured, taxpayer backstopped commercial banks to make margin loans for speculating in stocks. Unlike 1936, however, Wall Street trading houses are today allowed to own their own federally-insured, taxpayer backstopped commercial banks. That has allowed a lot of mischief to occur in the making of margin loans for speculating in the stock market. We’ll get to the details of all that in a few moments, but first some necessary background. Following the 1929 stock market crash, 9,096 banks that were holding deposits for average Americans failed as a result of insolvency between 1930 and 1933. (See chart above.) The 1930s banking crisis came to a head on March 6, 1933, just one day after President Franklin D. Roosevelt was inaugurated. Following a month-long run on the … Continue reading →

By Pam Martens and Russ Martens: October 4, 2021 ~ In the late eighteenth century, men gathered under a Buttonwood tree at 68 Wall in lower Manhattan and traded stocks among themselves. That’s not how it works today. Dallas Fed President Robert Kaplan had to give his “over $1 million” trades in a litany of individual stocks and his “over $1 million” transactions in S&P 500 futures to a licensed broker at a registered broker-dealer. The same thing applied to Boston Fed President Eric Rosengren in placing his $1000 to $50,000 trades 68 times in 2020 in individual stocks and publicly traded Real Estate Investment Trusts (REITs). The safeguards that failed at the Dallas Fed and the Boston Fed to stop their Presidents from trading like hedge fund wannabes should not have failed at the SEC-regulated Wall Street broker-dealers that placed these trades. The accounts at the trading firms for these … Continue reading →

By Pam Martens and Russ Martens: August 17, 2021 ~ President Joe Biden is tapping insiders from the Federal Reserve Bank of New York for key financial posts in his administration. These insiders played key roles during the financial crash of 2008 or the repo loan crisis in the fall of 2019 or the pandemic-related financial crisis of 2020. One of them was around for all three. We’ll get to the specific names in a moment, but first some necessary background. The Federal Reserve Board of Governors is an independent federal agency whose Board members are appointed by the President of the United States. But the 12 regional Federal Reserve banks that are part of the Federal Reserve System are owned, outright, by commercial banks, thus making these Fed banks private entities. The New York Fed stands out because it is owned by some of the largest and most dangerous mega … Continue reading →