By Pam Martens and Russ Martens: July 2, 2015 When Mario Draghi, President of the European Central Bank, famously said on July 26, 2012 that he would do “whatever it takes” to save the Euro, apparently providing a life line to Greece wasn’t part of the “whatever.” That has a lot of investors and heads of state worried: what else might not be part of his pledge? Would a financial crisis in Portugal, Spain or Italy also not be part of doing whatever it takes? It’s beginning to sound like there’s a monetary cap on doing whatever it takes. This is the exact quote from Draghi’s speech on July 26, 2012: “And so we view this, and I do not think we are unbiased observers, we think the euro is irreversible. And it’s not an empty word now, because I preceded saying exactly what actions have been made, are being … Continue reading →

By Pam Martens and Russ Martens: July 1, 2015 Greece has two things in common with bankrupt or teetering parts of the United States: it took advice and money from Wall Street while paying huge fees; now the catastrophic results of that bad advice is falling on the backs of the poor and most vulnerable citizens. In fact, we’re all Greeks now. From the $1.2 trillion in student debt now on the backs of U.S. college students, a growing number of whom are turning to prostitution to keep up, to teetering Puerto Rico, the bankruptcy of Jefferson County, Alabama in 2011, Detroit’s bankruptcy in 2013, Wall Street was on hand to grease the skids or set the train wreck in motion. As Greece pensioners line up outside of banks today to receive a fraction of their monthly pension, Puerto Rico has acknowledged it can’t pay its $72 billion in debt … Continue reading →

By Pam Martens and Russ Martens: June 30, 2015 Are Goldman Sachs executives Lloyd Blankfein, Gary Cohn and Addy Loudiadis losing any sleep over elderly pensioners waiting outside shuttered banks in Greece, desperately trying to obtain their pension checks to pay their rent and buy food? Are these Goldman honchos feeling a small pang of conscience over the humiliation by creditors of this once proud country? Perhaps Blankfein, who famously espoused that he’s “doing God’s work” might shed a tear or two for the small child clinging to her elderly Grandmother’s hand as she searches in Athens for an ATM that will give her $66 from her bank account – the maximum allowed per day under the newly imposed capital controls. According to investigative reports that appeared in Der Spiegel, the New York Times, BBC, and Bloomberg News from 2010 through 2012, Blankfein, now Goldman Sachs CEO, Cohn, now President … Continue reading →

By Pam Martens and Russ Martens: June 29, 2015 Greece has just a tad more population, at 11 million, than New York City and its boroughs. But this morning, it has caused hundreds of billions of dollars to be erased from stock and bond markets around the world. The situation in Greece this morning is as follows: banks and the Athens Stock Exchange have been closed until at least July 6, following a breakdown in talks between Greek Prime Minister Alexis Tsipras and the country’s creditors. The July 6 date stems from the vote in the Greek parliament over the weekend to hold a July 5 referendum allowing Greek citizens to vote on the austerity program offered by creditors in exchange for extending more loans to Greece. As a result of a run on the banks as the talks disintegrated, capital controls have now been imposed in Greece, allowing Greek … Continue reading →

By Pam Martens and Russ Martens: June 25, 2015 Remember when the Department of Homeland Security was issuing those color-coded terrorist alerts? Well, they don’t do that anymore.  They’re back to using plain ole black-and-white words to describe threats. Apparently, however, the U.S. Treasury’s Office of Financial Research (OFR) thought it was such a cool idea that they’ve started color-coding threats to our financial security from the denizens on Wall Street: the gang that brought our country to its knees in 2008 while the most expensive military in the world was hunting down robed cave-dwellers in the Middle East. OFR’s color-threat alert is called the Financial Stability Monitor. The monitor is based on approximately 60 indicators and organized as a heat map: The closer an indicator is to the red end, the more elevated the risks; the closer an indicator is to the green end of the spectrum, the lower … Continue reading →

By Pam Martens and Russ Martens: June 24, 2015 By any measure, the taxpayer bailouts and Federal Reserve loans of more than $13 trillion infused into the banking system during and after the 2008 financial collapse eclipse any other period in U.S. history. A growing body of research now suggests that these bailouts have set us up for ever greater episodes of moral hazard. Kartik B. Athreya, writing for the Richmond Fed, has described moral hazard this way: “As for implicit guarantees as a source of systemic risk, the idea is this: Any belief among financial market participants especially creditors, that they will be made whole by the public in the event of the failure of the assets they finance (i.e., that they will be ‘bailed out’) will lead them, all else equal, to (i) take greater risks, even if that means becoming ever more opaque or interconnected, and (ii) … Continue reading →

By Pam Martens and Russ Martens: June 23, 2015 Yesterday, Rajlakshmi De and Hamid Mehran, two researchers at the Federal Reserve Bank of New York, posted an interesting treatise on what it takes to climb into the ranks of the largest banks in the U.S. The duo inform us that as of 2007, prior to the financial crisis, just 0.4 percent of all U.S. banks held $50 billion or more in assets. The six largest U.S. banks in 2007, with assets ranging from $2.1 trillion to $238 billion, had one unique quality in common – they were all more than a century old, except for Wachovia which was one year short of a century. Wachovia was teetering in 2008 during the financial crisis and was merged into Wells Fargo. The authors do not mention this or that another of the six banks, Citigroup, became insolvent in 2008 but was illegally … Continue reading →

By Pam Martens and Russ Martens: June 22, 2015 Jeb Hensarling, Chair of the House Financial Services Committee, has his nose to the ground, hot on the scent of crooks and liars in the finance industry. But are they the important crooks and liars? The ones that crash economies? Like a dogged blood hound, Hensarling is determined to root out a Fed leak that occurred three years ago. This Thursday, he’s planning to beat up some more on the Consumer Financial Protection Bureau (CFPB), the young, underfunded agency that’s trying its best to protect average Americans against Wall Street’s crime wave. The concern is that Hensarling, a Republican from Texas who calls himself “a life-long conservative,” has a broken antenna. While Hensarling is hunting down a Fed leak that is already under a Justice Department investigation, here’s what else is going on in the financial world. The U.S. Treasury’s Office … Continue reading →

By Pam Martens and Russ Martens: June 19, 2015 Yesterday, Mary Jo White was in London to address the International Organization of Securities Commissions (IOSCO). While there, she commented on the U.K.’s new plan to hold senior managers in the finance industry responsible for fraud in their departments. Each senior manager will have a specific delegated responsibility and if fraud occurs in their area, he or she can be terminated and banned for life from the industry if the senior manager had knowledge of the fraud. White called the idea “intriguing.” While White was chatting with her fellow securities regulators in London on this novel idea of actually holding crooked Wall Street bosses accountable, Thomas Hayes was on trial in another section of London over charges that he rigged the benchmark interest rate, Libor, on which interest rates on loans and financial instruments are set around the world. Yesterday, Hayes produced … Continue reading →

By James A. Kidney: June 18, 2015 President Obama has two vacancies to fill on the five-member Securities and Exchange Commission.  One will be a Democrat and the other must be a Republican or independent.  Rather than use these appointments as an opportunity to bring on both real-world experience from finance and open the commissioner ranks beyond Washington and New York, early word is that the likely nominees are from the same old well:  Wall Street lawyers and congressional staffers.  These selections possibly have the virtue of relatively easy confirmation through a recalcitrant Senate, but they are a lost opportunity. Daniel Gallagher, one of two Republican commissioners, is resigning after serving since November 7, 2011. Long-time Democratic Commissioner Luis Aguilar is leaving after serving since July 31, 2008. Their replacements will serve well into the next administration.  They will face continuing issues in the long, drawn-out implementation and enforcement of … Continue reading →