Search Results for: Federal Reserve

By Pam Martens and Russ Martens: March 27, 2023 ~ On Sunday, Financial Times reporters Brooke Masters, Harriet Clarfelt and Kate Duguid published an article under the headline: “Money market funds swell by more than $286bn as investors pull deposits from banks.” This article needs some important clarifications. First is the fact that money market funds had to be bailed out by the government during both the 2008 financial crisis and the more recent financial panic of 2020 stemming from the COVID pandemic. On September 19, 2008 (four days after Lehman Brothers was placed into bankruptcy), stocks were crashing and investors were in a panic, the Department of the Treasury announced that it would provide a guarantee for money market mutual funds, standing behind more than $3.5 trillion in money market fund assets. In mid-March 2020, as the share prices of mega banks on Wall Street were plunging in price and … Continue reading →

By Pam Martens and Russ Martens: March 24, 2023 ~ The reassurances of Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Janet Yellen that the U.S. banking system is sound, stand in sharp contrast to what is happening in markets. This week, the shorts have found another easy new global bank target to try to take down after making a bundle of money betting against Credit Suisse, which was taken over for 82 cents a share on Sunday by its Swiss competitor, UBS. This time the global banking target is Deutsche Bank, a global behemoth we have warned about ad nauseum here at Wall Street On Parade. Deutsche Bank was a $120 dollar stock prior to the financial crisis in 2008. It closed yesterday at $9.65 in New York and is down another 10 percent in early morning trading in Europe. The weakness in Deutsche Bank is spilling over into … Continue reading →

By Pam Martens and Russ Martens: March 22, 2023 ~ On March 13 we published the chart below, showing the ten financial institutions that had taken the largest loan advances from the Federal Home Loan Bank of San Francisco as of year-end 2022. It’s a very ominous sign that the bank at the top of the list, Silicon Valley Bank, collapsed and is now under the control of the Federal Deposit Insurance Corporation (FDIC). Silicon Valley Bank had $212 billion in assets as of year-end 2022, making it the second largest bank failure in U.S. history. The largest failure was Washington Mutual in 2008, with approximately $300 billion in assets. The second bank on the list, First Republic Bank (ticker FRC), has seen its share price collapse, had its debt downgraded deeper into junk by S&P Global on Sunday, and is experiencing an exit stampede by depositors. The sixth bank on … Continue reading →

By Pam Martens and Russ Martens: March 20, 2023 ~ Yesterday, the Swiss banking giant, UBS, agreed to a shotgun wedding with its collapsing long-time Swiss rival, Credit Suisse. Switzerland has committed $173 billion in loans and guarantees to the combined firm. A key player in this deal was the central bank of Switzerland, the Swiss National Bank. That’s the very same central bank that had quietly bailed out UBS during the financial crisis of 2008 with the assistance of dollar swap lines from the Federal Reserve (the “Fed”) – the central bank of the U.S. Yesterday, the Fed announced the return of those emergency dollar swap lines as the shotgun wedding of UBS and Credit Suisse failed to quell a spreading banking panic. The way this UBS bailout went down in 2008 was illuminated in the audit of the Fed’s emergency bailout facilities from December 2007 to July 2010 that was … Continue reading →

By Pam Martens and Russ Martens: March 16, 2023 ~ U.S. Treasury Secretary Janet Yellen finds herself in a very dubious position. Under the Dodd-Frank financial reform legislation of 2010, the U.S. Treasury Secretary was given increased powers to oversee financial stability in the U.S. banking system. This increase in power came in response to the 2008 financial crisis – the worst financial collapse since the Great Depression. The legislation made the Treasury Secretary the Chair of the newly created Financial Stability Oversight Council (F-SOC), whose meetings include the heads of all of the federal agencies that supervise banks and trading on Wall Street. The legislation also required the Treasury Secretary’s authorization before the Federal Reserve could create any more of those $29 trillion emergency bailout programs for the mega banks – which had tethered themselves to casino trading on Wall Street since the repeal of the Glass-Steagall Act in 1999. … Continue reading →

By Pam Martens and Russ Martens: March 15, 2023 ~ The “Related Articles” linked below (a tiny sampling of relevant articles) will remind our readers just how long and in how many different ways we have been attempting to warn that the U.S. banking system was incompetently structured and at risk of systemic contagion. We have also repeatedly warned that the crony, captured Fed was the worst possible banking supervisor and should be stripped of its bank regulatory powers and restricted to setting monetary policy. We have repeatedly cautioned, citing experts in the field, that the Fed’s stress tests were little more than a placebo and would not prevent the next banking crisis. (Check out our numerous articles at this link. Scroll down.) On July 29 of last year we wrote that Wall Street Megabanks’ Multi-Billion Dollar Blunders Suggest Money Controls as Good as George Bailey’s Uncle Billy and summed up … Continue reading →

By Pam Martens and Russ Martens: March 14, 2023 ~ Last Wednesday, federally-insured Silvergate Bank announced that it was closing shop and liquidating. Its parent’s stock price (Silvergate Capital, ticker SI) had lost over 90 percent of its value over the prior year; it was under a Justice Department investigation for how it moved money for crypto-kingpin Sam Bankman-Fried’s house of frauds; and its depositors were fleeing. Oh – and by the way – its primary regulator was the Federal Reserve Bank of San Francisco. Last Friday, California state regulators closed Silicon Valley Bank and the Federal Deposit Insurance Corporation (FDIC) became the receiver. Its stock price had lost over 80 percent of its market value over the prior year; $150 billion of its $175 billion in deposits were uninsured, either because they exceeded the $250,000 FDIC cap and/or they were foreign deposits. The bank was effectively operating as a Wall … Continue reading →

By Pam Martens and Russ Martens: March 7, 2023 ~ On Friday, March 4, 2022, the Dow Jones Industrial Average closed at 33,614.7971. Yesterday, one year later, the Dow closed at 33,431.44, a negligible loss of a fraction of one percent – but still a loss. The Dow is composed of just 30 stocks. The S&P 500, a broader stock market index, includes the common stocks of 500 of the largest companies in the U.S. Over the past year, the S&P 500 fared even worse than the Dow. It went from 4,328.8729 on Friday, March 4, 2022 to yesterday’s closing price of 4,048.42 – a decline of 6 percent. The tech heavy Nasdaq Composite, which consisted of 3,607 component companies as of yesterday according to Nasdaq, delivered the worst performance of the three major indices over the past year. It traveled from 13,313.438 on Friday, March 4, 2022 to a closing … Continue reading →

By Pam Martens and Russ Martens: February 27, 2023 ~ On December 13, the U.S. Department of Justice released an 8-count criminal indictment against the former crypto kingpin, Sam Bankman-Fried. He was charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations.  Last Thursday, the Department of Justice added four additional criminal counts against Sam Bankman-Fried in a superseding indictment. These include: bank fraud; conspiracy to operate an unlicensed money transmitting business; and two counts involving the purchase and sale of derivatives. Bankman-Fried’s jury trial is scheduled to start in October. The charge of bank fraud is something that jury members can get their minds around – particularly when the alleged bank fraud is shown to have taken place at federally-insured banks which are backstopped … Continue reading →

By Pam Martens and Russ Martens: February 22, 2023 ~ The Dow Jones Industrial Average plunged 697 points by the closing bell yesterday, wiping out all of its gains this year. Here’s a rundown of what happened. At 2 p.m. ET today, the Federal Reserve will release the minutes of the Federal Open Market Committee (FOMC) meeting it held on January 31 and February 1. The stock market is particularly skittish on the day prior to the release of those minutes, out of concern that an overly hawkish tone on interest rates will tank stocks. Given that skittishness, all the stock market needed for a major selloff was a trigger. It got that when Bloomberg News published this headline at 1:36 a.m. in the morning: Morgan Stanley Says S&P 500 Could Drop 26% in Months. Morgan Stanley’s opinion matters for two main reasons: it has just shy of 16,000 stockbrokers (a/k/a … Continue reading →