By Pam Martens: September 17, 2013 Since last evening, corporate media has been in a fierce competition to spin another toothless settlement on Wall Street as a win for the new tough cop on the beat, Securities and Exchange Commission Chair, Mary Jo White. It takes quite the creative imagination to frame this as anything more than the continuance of Wall Street’s business model of looting billions and paying back millions. Crime is still the best profit center Wall Street has going for it — having thoroughly dissuaded its customers against trusting its advice on investments. According to leaks, the settlement tab to JPMorgan Chase to make most of its civil regulatory problems disappear regarding the London Whale trades will be $700 to $800 million. (There still may be open criminal probes by the U.S. Justice Department and FBI. The Commodity Futures Trading Commission may bring its own civil enforcement action.) … Continue reading →

By Pam Martens and Russ Martens: September 16, 2013 An institutionalized wealth transfer system is playing out at New York University, a nonprofit organization subsidized by the U.S. taxpayer.  Forgivable mortgage loans for multi-million dollar luxury homes have been doled out by NYU to an inner circle of administrators and elite faculty. The University’s President, John Sexton, has received an interest rate of less than one-quarter of one percent from NYU to finance a multi-million dollar beach residence on Fire Island. All this while NYU students carry the greatest burden of debt of any nonprofit university in the country – a figure placed at $659 million in 2010 by the Department of Education and now estimated to be well over $1 billion due to a poorly understood debt compounding trick called “capitalized interest.” While the unconscionable mortgage loans at NYU have received significant press attention and a Congressional probe by … Continue reading →

September 15, 2013 President Obama released the following statement early this evening regarding the decision by Larry Summers to withdraw his name from consideration for Chairman of the Federal Reserve Board of Governors: “Earlier today, I spoke with Larry Summers and accepted his decision to withdraw his name from consideration for Chairman of the Federal Reserve. Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today. I will always be grateful to Larry for his tireless work and service on behalf of his country, and I look forward to continuing to seek his guidance and counsel in the future.”  

By Pam Martens: September 12, 2013 President Obama finished up his August bus tours with speeches to high school and college students on his plans to make college more affordable. The President’s slogan of “college affordability” belies a growing crisis in the U.S. – student loan debt has now eclipsed credit card debt and stands at $1.2 trillion according to the Consumer Financial Protection Bureau (CFPB). The Financial Stability Oversight Council (F-SOC), a unit of the U.S. Treasury, warned in its 2013 annual report that high levels of student debt could have severe negative impacts on the U.S. economy, writing that it could “impact demand for housing, as young borrowers may be less able to access mortgage credit. Student debt levels may also lead to dampened consumption.” According to F-SOC, while household debt in general became more current on payments last year, 11.7 percent of student loans were more than … Continue reading →

By Pam Martens: September 11, 2013 In February of this year, the Consumer Financial Protection Bureau (CFPB), the new Federal agency that Senator Elizabeth Warren fought so hard to create against a tsunami of backlash from Wall Street and Republican ranks, asked the public to comment on making college more affordable and to describe their student loan experiences with private lenders. There was a tidal wave of nearly 30,000 responses. Public interest groups, nonprofit community programs, and thousands of college graduates responded. The most tragic stories came from students who augmented their Federal student loans with loans from the big Wall Street banks like Citibank, a unit of the bailed out poster child for bad behavior, Citigroup. Citibank borrowers tell horror stories of living without heat, living on food donations from friends, and watching their monthly student loan payment skyrocket without warning from $374 to $1025.53. The levels of stress and … Continue reading →

By Pam Martens: September 10, 2013  Citibank, the insured depository bank of the global behemoth, Citigroup, was bailed out by the U.S. taxpayer from 2008 through 2010 with over $2 trillion dollars in equity infusions, asset guarantees and loans of under one percent interest from the Federal Reserve. The far flung financial enterprise was bailed out despite a serial history of abusing its customers – crimes for which its regulators have imposed large fines and little justice. The undisputed reality is that the shareholders of Citigroup would be holding worthless stock today were it not for the company’s rescue by taxpayers during the Wall Street collapse five years ago. And yet, today, based on reports from coast to coast, the company is engaging in egregious abuses of struggling young college graduates who took out private student loans from Citibank. The generosity that the U.S. Congress, and Treasury and Federal Reserve lavished … Continue reading →

By Pam Martens: September 9, 2013 Wall Street has marshaled every ounce of political and public relations clout it can muster to defeat Eliot Spitzer from advancing into the position of New York City Comptroller. The New York City primary is tomorrow and, like clockwork, today’s Wall Street Journal’s opinion page features a vicious attack on Spitzer by Paul Atkins, a former SEC Commissioner turned public relations pro/opinion writer/media pundit and consultant to Wall Street. Atkins heads a firm, Patomak Global Partners, that provides consulting and litigation support to the financial services industry. Its web site boasts that “Our professional team includes two former Commissioners and a former General Counsel of the Securities and Exchange Commission, a former member of the Board of Governors of the Federal Reserve System, and others with diverse backgrounds and senior management experience in both public and private sector leadership positions.” In other words, they … Continue reading →

By Pam Martens: September 5, 2013 Yesterday, mainstream media was busy framing the news that JPMorgan is now under an eighth investigation by the U.S. Justice Department, this time a criminal probe into whether some of its employees obstructed the investigation by the Federal Energy Regulatory Commission (FERC) into the company’s manipulative trading of electricity in California and the Midwest. This is a highly unusual development for a number of reasons. FERC settled its claims against JPMorgan Ventures Energy Corporation for $410 million on July 30 of this year. That amount included a civil penalty of $285 million to the U.S. Treasury and a disgorgement of $125 million to be returned to ratepayers. Typically, when a company pays a settlement of that size, its lawyers have made sure there are no loose ends – especially not a criminal probe waiting in the wings. Once the money is paid out, the bank … Continue reading →

By Pam Martens: September 4, 2013  Someone needs to instant message Standard and Poor’s Financial Services LLC a legal tip: when you’re in a hole, stop digging. That would be potentially more sage advice than it’s currently getting from the three law firms representing it in its court battle with the U.S. Justice Department over the alleged bogus ratings it assigned to subprime Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs) in the run up to the Wall Street financial collapse in 2008.  In a court filing yesterday, S&P attempted to cast aspersions on the motives of the government in bringing the suit, telling the court:  “Plaintiff commenced this action in retaliation for Defendants’ exercise of their free speech rights with respect to the creditworthiness of the United States of America. Such free speech is protected under the First Amendment to the United States Constitution and the retaliation, causing … Continue reading →

By Pam Martens: September 3, 2013  After the greatest economic collapse since the Great Depression, after endless hearings in Congress going nonstop since 2008, after the voluminous report from the Financial Crisis Inquiry Commission, one would think we should know a great deal about the largest Wall Street banks that created the havoc and that stringent laws would have quickly been put in place to prevent another repeat.   Tragically, a Nation that can transmit trading data between New York and Chicago in 13.1 milliseconds, still has no idea what the biggest banks on Wall Street own or what threats those black holes of information pose to the national economy. This lack of transparency, combined with the failure of the 2010 Dodd-Frank financial reform legislation to, as yet, impose restraints on speculative trading (Volcker rule) and position limits on trades, renders the Wall Street of today even more dangerous than the Wall … Continue reading →