By Pam Martens: November 14, 2013 The Federal Reserve system turns 100 this coming December 23. Today, for the first time, a woman will undergo a Senate confirmation hearing to lead the Fed – an historic first. But gender is the last thing on anyone’s mind today when it comes to the new Fed Chairman. The Republicans are simmering over what they feel are “easy money” policies at the Fed. Wall Street will be measuring every syllable for a hint of when the Fed’s cash punchbowl of $85 billion a month in bond purchases might end. A few Democrats will delicately quiz Yellen on her views on ending too big to fail banks. What is very unlikely to emerge amid the theatrics in the Senate Banking confirmation hearing this morning, is the most basic question of all: how did a 100-year old institution created to implement independent monetary policy in … Continue reading →

By Pam Martens: November 13, 2013 Four seminal events occurred yesterday which carry dramatic overtones for next year’s midterm elections and the Presidential race in 2016. U.S. Senator Elizabeth Warren delivered a speech warning her Congressional colleagues in strident tones that Wall Street is now more dangerous than it was five years ago when it crashed. Warren, again, called for the restoration of the Glass-Steagall Act to prevent another financial calamity. Gallup released a poll showing the approval rating of Congress had fallen to nine percent, the lowest reading in the 39 years the firm has been asking the question. A Quinnipiac University poll reported President Obama’s popularity has fallen to the lowest point of his presidency, with a majority of Americans, 54 percent, now disapproving of his performance. And, finally, Americans for Financial Reform together with the Roosevelt Institute issued a 126-page report in conjunction with the speech by … Continue reading →

By Pam Martens: November 12, 2013 President Obama is about to do it again – appoint one of those revolving door Wall Street lawyers to head a critical top post at one of Wall Street’s key regulators. This time it’s the Chair of the Commodity Futures Trading Commission (CFTC). According to multiple leaks in the business press today, this afternoon the President will nominate Timothy Massad to head the CFTC – a man who spent 27 years at Cravath, Swaine & Moore, a core part of Wall Street’s legal muscle. Massad is not coming directly from Cravath this time around. On June 30, 2011, Massad was confirmed by the U.S. Senate to serve as the Department of Treasury’s Assistant Secretary for Financial Stability. If confirmed to head the CFTC, Massad will play a critical role in the regulation of derivatives, an area that has received heavy pushback from his former … Continue reading →

By Pam Martens: November 11, 2013 It’s time to visit the musty shelves of those rare book stores and ferret out a copy of Charles Mackay’s Extraordinary Popular Delusions and the Madness Of Crowds, or simply buy a reprinted version. Mackay’s book was first published in 1841and takes a hard look at greed-based manias like the tulip bubble in Holland in the 1600s and the South Sea bubble in the early 1700s. At the peak of the tulip bubble in 1637, it is reported that a single tulip bulb sold for many times the annual wage of a skilled laborer. The South Sea bubble was built around the British South Sea Company which seduced investors with the vision of great wealth from trade with South America. The company’s share price collapsed in the early 1700s, seriously impacting the British economy. Subsequent investigations revealed bribes and trading manipulations to pump up … Continue reading →

By Pam Martens: November 7, 2013 In recent months we’ve learned that the National Security Agency (NSA) has been spying on tens of millions of law-abiding citizens’ emails and telephone calls placed through companies like Google, Yahoo, Verizon, AT&T and Sprint Nextel. What the NSA does not appear to have been spying on are the Bloomberg chat rooms where real financial frauds involving potentially trillions of dollars in trades have been occurring for years. Now, the ultimate embarrassment has occurred for those sleuths at the NSA. The Wall Street Journal is reporting that investigators probing a new line of market manipulation, rigged foreign currency trading, have found that potential lawbreakers were so cavalier about their conduct that they used chat names such as “The Bandits’ Club” and “The Cartel.” On December 20, 2012, we reported that the Bloomberg chat room was the brand choice for traders plotting to rig the … Continue reading →

By Pam Martens: November 6, 2013 Public Advocate, Bill de Blasio, running on the Democratic ticket, won a landslide victory for New York City Mayor last evening, beating his Republican challenger, Joe Lhota, 73.3 percent to 24.3 percent with 99.7 percent of the vote counted thus far. The landslide victory is a harsh rebuke to the current billionaire Mayor, Michael Bloomberg, who used his enormous wealth to overturn the previous two-term limit, giving himself an extra four years in office. It is also a long in the making victory for those who believe Bloomberg’s 12 years in office ushered in a merciless gilded age, bestowing benefits on the rich and Wall Street elite while savaging the poor and middle class, and silencing dissent with brutal police force. The Republican choice of Joseph (Joe) Lhota demonstrated the tone-deaf quality of the party bosses in New York. Lhota had a 14-year Wall … Continue reading →

By Pam Martens: November 5, 2013 I’d like to go on the record that I think tweeting is to journalism what Pop Tarts are to breakfast. And I’d like to go one step further: to explain why Twitter is coming to market as an Initial Public Offering (IPO) right now, requires long-form journalism. Think about that. If an enlightened citizen is the best defense against a rigged Wall Street and a hollowed out democracy, how much enlightenment can one convey with a Twitter limit of 140 characters on your speech. There are mushrooming signs that this stock market is being artificially hyped in much the same way that the dot.com mania was delivered to the public. Consider this excerpt from the Wall Street paper of record, the Wall Street Journal, from two days ago: “ ‘After all these years of the market going up, investors are getting reacquainted with equities,’ … Continue reading →

By Pam Martens: November 4, 2013 Nothing reveals the incestuous, one-percent-mindset that New York City Mayor Michael Bloomberg and Police Commissioner Raymond Kelly have with Wall Street than the next to last photo at this link. The photo shows an employee of U.S. Attorney General Eric Holder’s number one target for financial fraud investigations, JPMorgan Chase, working inside a high security spy center in Lower Manhattan to — wait for it — help the New York City Police Department catch crooks. While most law enforcement bodies around the U.S. would instantly weed out serial wrongdoers as job hires, Bloomberg and Kelly have created an art form out of joint policing ventures with Wall Street, operating both a rent-a-cop program with Wall Street as well as pumping at least $150 million of taxpayer money into the Lower Manhattan Security Coordination Center where Wall Street employees sit elbow to elbow with NYPD … Continue reading →

By Pam Martens: October 31, 2013 Millions of Americans, if not most Americans, have no idea how to go about checking their investment statements for accuracy and to protect against fraud. In that respect, Bernard L. Madoff might render a service to the country – if we pay close attention. To veterans of Wall Street who handle retail accounts (those for the average individual investor), there has been the ongoing mystery as to how Madoff could have created fake account statements for thousands of clients showing the nitty-gritty details that we know to be captured on legitimate account statements. For example, every transaction that generates cash into the account must be captured: the quarterly payment of dividends on a stock or semi-annual interest on a bond; the proceeds of a sale of a security; the payment of interest on a money market fund used to “sweep” the proceeds of sales. … Continue reading →

By Pam Martens: October 30, 2013 The trial of five former employees of Bernard Madoff’s Ponzi operation is currently playing out in Manhattan as the U.S. Justice Department weighs bringing charges against JPMorgan Chase, where Madoff had his primary business banking account, for ignoring flashing red lights that a fraud was taking place. According to lawsuits filed by Irving Picard, the Trustee handling the Madoff recovery fund, JPMorgan knew that Madoff was supposed to be engaged in managing stock portfolios for hundreds of clients. JPMorgan even created structured investments that allowed investors to make leveraged bets on the returns achieved by Madoff. But the Madoff business bank account that JPMorgan Chase oversaw, showed billions of dollars in cash being wired in and out but no payments ever going to any party engaged in processing or clearing a stock trade. Under Wall Street’s Know Your Customer Rule, the activity in the … Continue reading →