By Pam Martens: July 3, 2013  The Federal Reserve Board yesterday announced that it had “approved a final rule to help ensure banks maintain strong capital positions,” but it was as clear as mud when or if the new rule would take effect and how it would lessen the risk of the too-big-to-fail banks and prevent another taxpayer bailout of Wall Street. After years of stonewalling on higher capital rules for banks, there was the nagging suspicion that the Federal Reserve decided to talk the talk on tougher standards after the House Financial Services Committee held a hearing last Wednesday that delivered a devastating assessment of how dangerous the largest Wall Street banks remain to the U.S. economy.  Thomas Hoenig, former President of the Federal Reserve Bank of Kansas City and now Vice Chair of the FDIC, reflected the general mood at the hearing when he stated that the biggest … Continue reading →

By Pam Martens: July 2, 2013  In July 2002, less than a year after Congress passed the USA Patriot Act, Nancy Chang, then Senior Litigation Attorney for the Center for Constitutional Rights, published a prophetic and comprehensive book about the legislation titled: Silencing Political Dissent: How Post-September 11 Anti-terrorism Measures Threaten our Civil Liberties.  Chang was one of the early visionaries to see that the USA Patriot Act was not so much about protecting us from terrorists but a weapon to control, contain and criminalize political dissent. I had the privilege of assisting in a New York City book launch event for Chang in September 2002, where Chang warned that the endless war on terrorism theme was critically different from past assaults on Constitutional freedoms during war time. The earlier crises came to an end when the country returned to peacetime. With an endless war mantra, there would be no … Continue reading →

By Pam Martens: July 1, 2013 Yesterday, beginning in the morning, every major online news outlet had a front page article on the breaking story that the NSA had electronically bugged the diplomatic offices of the European Union in Washington, D.C., at the United Nations and in Brussels – every outlet except the paper of record, the New York Times. The news first broke on Saturday at the online site of the German magazine, Der Spiegel, and went viral thereafter. The details of the story came from new documents leaked by Edward Snowden, the former intelligence contractor now sought by the U.S. for extradition and prosecution. Snowden is believed to be in an airport in Moscow while he seeks permanent asylum from Ecuador or another country. On Sunday, as hour after hour went by, as more outrage and invective flowed out of Europe, the story was nonexistent on the Times … Continue reading →

By Pam Martens: June 28, 2013  The day after the U.S. House of Representatives’ Financial Services Committee held a hearing on why their seminal financial reform legislation, Dodd-Frank, is a bureaucratic boondoggle that will not prevent another taxpayer bailout of Wall Street in the event of a systemic collapse, we learn just how vulnerable the system is to powerful men allowed to play with other people’s money.  Yesterday, the Commodity Futures Trading Commission (CFTC) brought charges in Federal Court against MF Global, its former CEO, Jon Corzine, and its former Assistant Treasurer, Edith O’Brien. Corzine is a former U.S. Senator and Governor of New Jersey. The two are charged with the unlawful allocation of customer money at the commodities trading firm. The company has agreed to settle the charges against the firm for $100 million. The claims remain outstanding against the individuals.  MFGlobal collapsed in October 2011. Corzine had directed the … Continue reading →

By Pam Martens: June 27, 2013  Former Federal Deposit Insurance Corporation Chair, Sheila Bair, was watching the clock on the wall yesterday during her questioning by the House Financial Services Committee on whether the Dodd-Frank financial reform legislation can stop another taxpayer bailout of too-big-to-fail banks.  In the midst of the hearing, it was announced that Bair would have to depart at 12 noon. Based on the answers coming from Bair versus the three other witnesses, there was the impression that Bair wanted to beat a hasty retreat to lunch.  The problem comes down to this: Bair and many on the Democrats’ side of the aisle, refuse to acknowledge that their much ballyhooed financial reform legislation passed in July 2010, the  Dodd–Frank Wall Street Reform and Consumer Protection Act, is an utter failure in reining in the abuses of the Wall Street behemoths as well as useless in preventing another … Continue reading →

By Pam Martens: June 26, 2013  The U.S. House of Representatives’ Financial Services Committee will convene at 10 a.m. this morning to hear new warnings about the growing dangers posed by the too big to fail Wall Street banks.  On deck to testify are: Thomas Hoenig, Vice Chairman of the Federal Deposit Insurance Corporation (FDIC); Richard W. Fisher, President of the Federal Reserve Bank of Dallas; Jeffrey Lacker, President of the Federal Reserve Bank of Richmond; and Sheila Bair, former Chair of the FDIC, now with the Pew Charitable Trust. (Bair wrote the quintessential insider’s account of the 2008 crash, Bull by the Horns.)   Tragically, these individuals spent hours writing their testimony with the full knowledge that it will far on the deaf ears of a Congress that is incapable of seeing a train wreck coming down the tracks until the mangled cars lie scattered over the landscape.  Here’s a … Continue reading →

By Pam Martens: June 25, 2013  The frightening “L” word is now making the rounds on Wall Street, resurrecting fears of the early days of the 2008 financial crisis. According to Wall Street veterans, liquidity has dried up in finding buyers for what hedge funds are desperate to sell: large blocks of lower rated bonds.  Since Federal Reserve Chairman Ben Bernanke held his press conference on Wednesday, June 19, of last week, hedge funds have been stampeding to unwind trades, driving down the value of not just bonds, but stocks, exchange-traded funds (ETFs) and gold as well. Even U.S. Treasury notes, the typical safe haven amidst panic selling, have lost significant value. The Treasury selloff is likely a result of the liquidity of the instrument; when hedge funds must raise cash quickly to meet margin calls and there are no bids for some of their other asset holdings, they have no … Continue reading →

By Pam Martens: June 23, 2013  Three well known figures on Wall Street find themselves entangled in NYU’s mortgage-gate, exactly one decade after their roles were scrutinized in the biggest New York Stock Exchange scandal since the Senate hearings of the early 1930s exposed the shady dealings of its members.  In 2003, Wall Street super-lawyer, Martin Lipton, was advising his friend, Richard (Dick) Grasso, CEO of the New York Stock Exchange, on a massive compensation plan while simultaneously serving as counsel to the Stock Exchange’s committee on governance and as Chairman of its Legal Advisory Committee.  Joining Lipton in the unpleasant public spotlight was Kenneth Langone, Chair of the Exchange’s Compensation Committee, which had awarded Grasso $130 million in compensation and benefits for the three-year period of 2000 through 2002. That sum represented 99 percent of the Exchange’s net income for those three years according to then New York State … Continue reading →

By Pam Martens: June 21, 2013  In the past two trading sessions, Wednesday and Thursday of this week, the Dow Jones Industrial Average has shaved 550 points out of investors’ pockets. Mainstream media is in lock-step agreement that the decline is owing to fears of slowing growth in China and the potential for the Federal Reserve to “taper,” or retrench from buying $85 billion a month in mortgage-backed securities and U.S. Treasuries. To borrow a phrase from H.L. Mencken, “When you hear somebody say ‘this is not about money,’ it’s about money.”  There’s an old expression on Wall Street: bull markets eventually crumble under their own weight. That’s because, at some point, the value of the market is too big to drive higher. It has only one direction in which it can move and that’s down. It’s about money.  According to the World Bank, the total value (or market capitalization) … Continue reading →

By Pam Martens: June 20, 2013  For the past two days, some of the priciest media real estate in America has been obsessing over the new signature that Jack Lew, the U.S. Treasury Secretary, is sporting on the nation’s currency. No less than the Washington Post, Los Angeles Times, New York Daily News, CBS News and numerous other media outlets devoted space to this trivia about Lew’s squiggly signature getting a makeover.  While this non-story was playing out, AlterNet and Wall Street On Parade co-published an investigation of New York University, where Lew served as Executive Vice President and Chief Operating Officer from 2001 to June of 2006. The New York Times printed a similar investigation on its front page yesterday.  Both investigations showed that in addition to questionable mortgage financing of primary residences for faculty, NYU was financing lavish vacation homes for both administrators and faculty. In some cases, it was … Continue reading →