By Pam Martens and Russ Martens: October 30, 2014  Back on June 25 of this year, Wall Street On Parade ran the following headline: “BOE’s Carney: Inflated Central Bank Balance Sheet the New Normal; Expect to Hear the Same Conclusion from the U.S. Fed.” The day before our headline, Bank of England Governor, Mark Carney, had just explained to Parliament why their central bank’s balance sheet, bloated through quantitative easing, was not going to be shrinking anytime soon. Carney: “…I would define – picking up on what my colleagues have said – pre-crisis position as a position that’s consistent with the normal course of liquidity requirements of the banking system…What has changed, to the good, in terms of the banking system here is that through regulation and supervision we have put much more responsibility on the banks themselves to hold liquidity to manage liquidity shocks. And, as a consequence of … Continue reading →

By Pam Martens: October 29, 2014 It appears that Senators Elizabeth Warren and Sherrod Brown believe they may have a battle on their hands getting their colleagues on the Senate Banking Committee to agree to hold hearings on the now notorious tape recordings secretly made by former New York Fed bank examiner, Carmen Segarra, showing a cozy relationship between the regulator and Goldman Sachs. Petitions have sprung up all over the internet, with more than 129,000 signatures as of this morning, demanding that Congress hold hearings to investigate whether the Federal Reserve System, and specifically the New York Fed, function as merely sycophantic fronts for Wall Street or if they serve any meaningful regulatory role. In addition to petitions at Credo, MoveOn.org and Public Citizen, campaign sites for Senators Warren and Brown have also set up petitions, but those sites do not show how many signatures have been collected. As … Continue reading →

By Pam Martens: October 28, 2014 Yesterday the Wall Street Journal gave prominence to the following headline on page one of its newspaper with the story jumping to page A2: “Bad Market Timing Fueled Wealth Gap.” Through the use of the word “fueled” in that headline, the reader is conditioned to believe that market timing is a significant cause of wealth inequality in the United States – a completely bogus idea for which there exists mountains of research to the contrary. The online version of the article includes a video interview with the author, Josh Zumbrun, and this caption appears under the video: “Millions of Americans bought high and sold low, which caused them to unknowingly widen economic inequality. WSJ’s Josh Zumbrun explains on MoneyBeat with Paul Vigna.” The crux of this thesis is built in the first three paragraphs of the article as follows: “Millions of Americans inadvertently made … Continue reading →

By Pam Martens and Russ Martens: October 27, 2014  The contrast between Wall Street’s continuity government in Washington under another Clinton in the White House and the charismatic populist voice of Senator Elizabeth Warren as she stumps for Democrats in the midterms, is awakening millions of Americans to the idea that there may be choices after all in the 2016 presidential election. Columnist Eugene Robinson said it best last Monday in the Washington Post, writing that Senator Warren’s “swing through Colorado, Minnesota and Iowa to rally the faithful displayed something no other potential contender for the 2016 presidential nomination, including Hillary Clinton, seems able to present: a message.” What Robinson really means is “a message of hope” – that Wall Street’s wealth transfer system, institutionalized under a protection racket by members of Congress who keep their seats using Wall Street’s campaign dough, could come under serious challenge with Warren in … Continue reading →

By Pam Martens and Russ Martens: October 23, 2014 What the New York Fed attempted to pull off this past Monday with its full-day conference for the execs of wayward Wall Street banks was a public relations stunt to switch the national debate from its culture to Wall Street’s culture. Styled as a “Workshop on Reforming Culture and Behavior in the Financial Services Industry,” the event came less than a month after ProPublica and public radio’s “This American Life” released internal tape recordings made by a former New York Fed bank examiner, Carmen Segarra, revealing a regulator with no bark or bite. ProPublica’s Jake Bernstein wrote that the tapes and a confidential report by an outside consultant demonstrated the New York Fed’s “history of deference to banks.” But there is far more to this story. Wall Street banking executives, who elect two-thirds of the Board of Directors of the New … Continue reading →

By Pam Martens and Russ Martens: October 22, 2014  Yesterday the Inspector General of the Federal Reserve System released a highly abbreviated report on the New York Fed’s supervision of JPMorgan’s Chief Investment Office (CIO) that spawned the $6.2 billion in exotic derivative losses in 2012 – using hundreds of billions of dollars in FDIC insured deposits to make those wild bets. The debacle became known as the London Whale since the outsized trades were conducted in London. The four page summary report that was sanitized for the public includes two bombshells for those who took the time to read the report carefully. First, the Inspector General specifically notes that “we selected July 2004 through April 2012 as the time period for our evaluation. July 2004 marked JPMC’s merger with Bank One Corporation (Bank One), and JPMC created the CIO in 2005.” What is the relevance of that nugget? We … Continue reading →

By Pam Martens and Russ Martens: October 21, 2014 In 30 years of observing Wall Street, we can’t remember a headline like the one that appeared yesterday at Reuters: “IBM to Pay GlobalFoundries $1.5 Billion to Take Chip Unit.” When one can’t even give a business away that includes thousands of patents, IBM engineers and two operating factories, times are tough. The market thought so also; by the closing bell yesterday, IBM’s stock was down $12.95, or 7 percent, to $169.10. The acquirer of the IBM semiconductor business, GlobalFoundries, is headquartered in Silicon Valley. Its parent is Advanced Technology Investment Company (ATIC), which is owned by the Abu Dhabi government’s investment arm, Mubadala Development Company. In May, ATIC announced it was changing its name to Mubadala Technology. Abu Dhabi likely drove a very hard bargain with IBM in this deal because it has good reason to question promises made by American … Continue reading →

By Pam Martens and Russ Martens: October 20, 2014  It took 200 years of hard data in a bestselling book by Thomas Piketty, awesome graphs and charts in Robert Reich’s documentary, “Inequality for All,” and years of scolding from Wall Street on Parade, but Fed Chair Janet Yellen has finally, and correctly, arrived at the idea that the nation’s economic ills are deeply rooted in the fact that U.S. “income and wealth inequality are near their highest levels in the past hundred years.” That was the message Yellen delivered on Friday in a speech at the Federal Reserve Bank of Boston, replete with stomach-churning figures from the Fed. Make no mistake about it, coming at the end of a week that saw dramatic up and down spikes in the stock market – Yellen was sending a pivotal message to the Wall Street wealth hoarders – your billionaire standing could be … Continue reading →

By Pam Martens and Russ Martens: October 16, 2014 If you happened to be sitting behind a trading screen on Wall Street in late August and September 1998, you’ve likely been having some déjà vu over the past seven trading sessions. Intraday rallies continue to fail; there is a thundering stampede into Treasuries; rumors are buzzing about hedge funds in trouble; waves of selling pressure suggest wholesale dumping to meet margin calls. If you needed any more evidence that there is some serious stuff going on behind the scenes on Wall Street, you got it in yesterday’s stock market open. Within minutes the Dow Jones Industrial Average had plunged 370 points in a panic selling spree as buyers went on strike. The Dow was down as much as 458 points in early afternoon before trimming its loses before the final bell to close at a minus 173 points. It’s all … Continue reading →

By Pam Martens and Russ Martens: October 15, 2014  New York City has 8.4 million people living in its boroughs. But when it comes to defending those charged with financial crimes, it’s a very small, clubby world of people who are either related to each other or have worked together in the past. And this clubby group has one more thing in common: most of its members seem to be lavishing huge campaign contributions on U.S. Senator Charles (Chuck) Schumer of New York – a man who is in a position to recommend Federal Judge appointments and the Justice Department’s U.S. Attorney who will prosecute the financial crimes – or not. These are the findings in a new on-line book, JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook, being offered free as a chapter a month by attorneys Helen Davis Chaitman and Lance Gotthoffer. (Chaitman is … Continue reading →