Search Results for: Federal Reserve

By Pam Martens and Russ Martens: February 10, 2023 ~ Credit Suisse continued its long death spiral yesterday, losing 15.64 percent of its market value in one trading session to close at $3.02 on the New York Stock Exchange. The trading action came on the heels of an earnings report that was excruciatingly bad – even for Credit Suisse. The Global Systemically Important Bank (G-SIB), which means it’s interconnected to other G-SIBs that could bring down the global financial system, reported yesterday that its clients had yanked over $100 billion in just the fourth quarter — which was more than eight times the outflow in the third quarter. Its pre-tax loss for the quarter was $1.51 billion, marking its fifth consecutive earnings loss. Credit Suisse is Switzerland’s second largest bank, after UBS, but its troubled history looks more like that of a bank in a banana republic. On March 26, 2021, … Continue reading →

By Pam Martens and Russ Martens: January 30, 2023 ~ According to a Yale School of Management study, in 2013 JPMorgan Chase had 1,339 hedge fund clients. As of July of last year, that number had soared to 4,281 according to the annual Convergence Inc. study. While Goldman Sachs and Morgan Stanley topped the total number of hedge fund clients (with 5,150 and 4,964, respectively) JPMorgan Chase ranked number one in terms of hedge fund Assets Under Advisement (AUA). (See Convergence Inc. study linked above.) There’s a big problem here that federal bank regulators are choosing to ignore at the peril of the U.S. financial system. JPMorgan Chase, unlike Goldman Sachs and Morgan Stanley, is the largest federally insured, taxpayer backstopped, depository bank in the United States with more than $2.47 trillion in deposits as of June 30, 2022. Unfortunately, as a result of the repeal of the Glass-Steagall Act in … Continue reading →

By Pam Martens and Russ Martens: January 19, 2023 ~ On Tuesday, Jerome Powell’s Federal Reserve once again thumbed its nose at President Biden’s antitrust directive regarding the creation of more mega banks through merger. This time around, the Fed allowed the Bank of Montreal, with assets of $834 billion, and its subsidiary, BMO Financial, to gobble up Bank of the West, based in San Francisco. Following the merger, Bank of the West is to be merged into Bank of Montreal’s subsidiary bank, BMO Harris Bank. On Friday, July 9, 2021, President Biden released a sweeping Executive Order that warned federal bank regulators against actions that create “excessive market concentration” with specific mention of bank merger activity. One business day later, the Federal Reserve announced that it had approved another bank merger. According to the Fed’s own data, since January 1, 2006, it has approved 4,506 bank mergers, while denying one application. (See … Continue reading →

By Pam Martens and Russ Martens: January 5, 2023 ~ This coming Saturday will mark the 16-month anniversary of former Wall Street Journal reporter Mike Derby setting off a media firestorm with his reporting that the then President of the Dallas Fed, Robert Kaplan, had “made multiple million-dollar-plus stock trades in 2020,” a year in which Kaplan was a voting member of the Fed’s Federal Open Market Committee (FOMC) with access to inside information. While the trading scandal spread to numerous other Fed officials, including Fed Chairman Jerome Powell, the case against Kaplan seemed like a prime candidate for a criminal investigation by the U.S. Department of Justice. Not only was Kaplan sitting on inside information gleaned from the Fed, but he was making market-moving statements himself on television. When Wall Street On Parade obtained Kaplan’s trading records from the Dallas Fed shortly after Derby’s article appeared, it became clear that the stock trading … Continue reading →

By Pam Martens and Russ Martens: December 6, 2022 ~ U.S. Treasury Secretary Janet Yellen has the dual role of Chairing the Financial Stability Oversight Council (F-SOC), whose role is to provide “comprehensive monitoring of the stability of our nation’s financial system.” Heads of each of the federal agencies that supervise Wall Street and the mega banks sit in on meetings of F-SOC. One would think that such an august body would have a handle on “staggering” threats to the U.S. financial system – especially since F-SOC was created under the 2010 Dodd-Frank financial reform legislation to prevent a replay of the off-balance sheet derivatives that crashed the U.S. economy in 2008 and forced an unprecedented and secret bailout of U.S. and foreign global banks by the Federal Reserve to the tune of $29 trillion. If Yellen is aware of the latest threat to financial stability, she’s not sharing the details … Continue reading →

By Pam Martens and Russ Martens: December 1, 2022 ~ That $4 billion capital raise that was supposed to shore up confidence in global banking behemoth Credit Suisse turns out to have been too little, too late. Yesterday, 5-year Credit Default Swaps (CDS) on Credit Suisse blew out to 446 basis points. That’s up from 55 basis points in January and more than five times where CDS on its peer Swiss bank, UBS, are trading. The price of a Credit Default Swap reflects the cost of insuring oneself against a debt default by the bank. Who might be desperate to buy protection against a default by Credit Suisse and driving up the cost of that protection? The mega banks on Wall Street that are counterparties to its derivative trades come to mind, as well as hedge fund speculators. Things don’t look any brighter this morning for Credit Suisse. Its shares are … Continue reading →

By Pam Martens and Russ Martens: November 29, 2022 ~ If there is one person in America who comprehensively understands the threats to the U.S. banking system, it is Arthur E. Wilmarth, Jr., author of the 2020 seminal book, Taming the Megabanks: Why We Need a New Glass-Steagall Act. Wilmarth is Professor Emeritus of Law at George Washington University Law School and has published more than 40 law review articles and book chapters in the fields of financial regulation and American constitutional history. Wilmarth had this to say about the way the Fed allowed a crypto outfit, SoFi, to scoop up a federally-insured bank in February of this year: “The San Francisco Fed relied on the same five-year transitional exemption in the BHC Act [Bank Holding Company Act] to allow SoFi to acquire Golden Pacific Bancorp and its national bank subsidiary despite SoFi’s nonconforming crypto trading activities. I find it astonishing and … Continue reading →

By Pam Martens and Russ Martens: November 7, 2022 ~ One minute after the stock market closed on Friday, the Federal Reserve mailed out a link to its newly-released Financial Stability Report to folks who have signed up to get press releases from the Fed. For those of you who have been reading our reports on the Fed for years – its unaccountable money printing and bailouts of Wall Street, the opaque activities of the trading floors owned by the New York Fed, its unchecked conflicts of interest, and its brazen, and as yet unprosecuted, trading scandal – you might suspect that the Fed would have pulled a lot of punches in its “Financial Stability Report.” You would be correct. On the topic of derivatives, which remain the greatest risk at the mega banks on Wall Street, the word “derivatives” is mentioned just eight times in the report – with little … Continue reading →

By Pam Martens and Russ Martens: November 4, 2022 ~ On April 21 Josh Bivens posted a titillating analysis on the Working Economics Blog. Bivens has a Ph.D. in Economics from the New School for Social Research and is the Director of Research at the Economic Policy Institute. The blog post was titled: “Corporate profits have contributed disproportionately to inflation. How should policymakers respond?” Included in the blog post was a graph showing that corporate profits account for 53.9 percent of the recent rise in inflation versus an average of 11.4 percent for the period 1979 through 2019. (See above chart.) Bevins’ chart made it into the hands of Congresswoman Katie Porter, who blew it up into a giant poster and explained its significance during a hearing before the House Subcommittee on Economic and Consumer Policy on September 22. The hearing was titled: “Power and Profiteering: How Certain Industries Hiked Prices, … Continue reading →

By Pam Martens and Russ Martens: November 3, 2022 ~ The Fed released its FOMC decision to raise interest rates by 0.75 percent at 2 p.m. yesterday, bringing its benchmark Fed Funds rate to a range of 3.75 to 4.00 percent. The decision contained this statement: “In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.” That statement was greeted as bullish by the stock market. As Fed Chair Jerome Powell’s press conference started at 2:30 p.m., the Dow had soared by 277 points. By 2:34 p.m., the Dow was up 400 points. But things dramatically changed when Powell started taking questions from the press. By 3:15 p.m. when the press conference … Continue reading →