By Pam Martens: June 5, 2013  It’s not that Congress actually believes that it has passed legislation to rein in the Wall Street frauds and abuses that crashed the largest economy in the world. It’s that Congress desperately wants Americans to think it has Wall Street under control – not the other way around. That’s why there is going to be a lot of screaming and phone slamming on Capitol Hill today. Katy Burne has busted one more Wall Street illusion today with her piece on the front page of the Wall Street Journal that offers up this headline: “One of Wall Street’s Riskiest Bets Returns.”  According to Burne, two of the largest Wall Street firms are assembling Synthetic Collateralized Debt Obligations (CDOs). Adding to the Congressional angst will be the name of one of the firms involved and the location of the bankers putting the deals together: JPMorgan and London.  That … Continue reading →

By Pam Martens: June 4, 2013 The Institute for Supply Management’s (ISM) manufacturing index contracted in May to a reading of 49, the lowest level since it registered a reading of 45.8 percent in June 2009. A reading below 50 means the manufacturing sector is contracting. The data, called the PMI or Purchasing Managers’ Index, is based on a survey of more than 300 purchasing and supply executives from around the country who respond anonymously to a monthly questionnaire. With the exception of a four-year interruption during World War II, ISM has published the data monthly since 1931. Both the index and a number of its individual components showed broad-based weakness in May. ISM’s new order index registered 48.8 percent in May, a decrease of 3.5 percentage points when compared to the April reading of 52.3 percent. The Backlog of Orders Index registered 48 percent, a 5 percent drop from … Continue reading →

By Pam Martens: June 3, 2013 The New York Stock Exchange has released data showing that the amount of borrowing against assets held in brokerage accounts as of April 30, 2013 has reached an all time record. Called margin loans, investors have borrowed $384 billion against their accounts, topping the prior record of $381.4 billion in margin debt set in July 2007 – just before the onset of the financial crisis. The ramp up in margin debt has been occurring at a steady pace. It stood at $284.6 billion in June 2012; $330 billion at the end of December 2012; and has risen each month since then to reach $384 billion at the end of April 2013, according to the most recent data listed at the New York Stock Exchange. But just who is it that is taking out of all these risky loans? If it’s the small, retail investor, that should set … Continue reading →

By Pam Martens: May 31, 2013 Ignore this past week’s trading in the junk bond market at your own peril. On May 7 and May 8 of this year, junk bonds fell to record low yields of 4.97 and 4.96 percent, respectively, according to the Barclays U.S. Corporate High Yield Index. (Wall Street prefers the misleading title of “High Yield” to peddle its junk bond wares.) Back in 2008, junk bond yields were trading as high as 19 percent. (Junk bonds are those rated below Baa3 by Moody’s and below BBB- by Standard & Poor’s.) In the last two weeks, junk bond prices have been selling off as everyone from small investors, pension funds, insurance companies and mutual fund portfolio managers reassess the amount of bond support that will be coming from the Federal Reserve in the future. While prices of Treasury bonds and investment grade corporate bonds have also … Continue reading →

 By Pam Martens: May 30, 2013 Jay Sekulow is all about freedom and liberty – for some. He’s not a fan of a woman’s right to the control of her own body. He’s been a major litigator on behalf of abortion protesters’ rights. He’s a big proponent of religious freedom — for some. His nonprofit filed a lawsuit to stop the ground zero mosque. In the last two weeks, he’s been on a whirlwind of television interviews railing against the oppression of the IRS stalling the rights of his clients to get their organizations registered as tax-exempt nonprofits – some of which were political organizations with clearly no right to get registered. His clients are Tea Party groups, whose mottos invariably include the words liberty and freedom. And now it turns out, this is the same man who helped John Ashcroft write the USA Patriot Act, despised by right and left alike … Continue reading →

By Pam Martens: May 29, 2013  As we reported yesterday, Jay Sekulow has spent the last two weeks burning shoe leather racing from one network studio to the next to pump up an IRS “scandal.” Now Sekulow has a lot of explaining to do as to why rampant conflicts of interests in his dizzying web of nonprofit groups were never reined in – even after being exposed in 2011 in the pages of USA Today.  New documents have surfaced in Sekulow’s operations, raising questions about his business dealings with former U.S. Attorney General John Ashcroft and television evangelist Pat Robertson.  One month after stepping down as U.S. Attorney General in 2005, John Ashcroft accepted a part-time teaching position at Regent University, a Christian institution founded by Robertson, who is currently Chancellor and Executive Chairman at the University. Ashcroft has remained at Regent University, currently serving as Distinguished Professor of Law and … Continue reading →

By Pam Martens: May 28, 2013  Jay Sekulow will never be accused of a lack of audacity. The man who has orchestrated and pumped the “scandal” that the IRS was unfairly targeting nonprofits tied to the Tea Party, is the same man who filed 27 applications with the IRS in recent years seeking tax-exempt status for Tea Party and related groups. He’s also the man who together with family and business interests have reaped at least $40 million since 1998 from a tangled web of IRS approved nonprofits with eye-popping conflicts of interest. In the early days of the IRS controversy, Jay Sekulow was a major source of information for network news. On May 13, he framed the controversy for CBS News and the PBS Newshour. Two days later he appeared on GBTV with Glenn Beck, framing the current IRS matter as “worse” than in the days of Nixon. He also appeared on the … Continue reading →

By Pam Martens: May 24, 2013  For five solid years, the highs and lows of JPMorgan’s Chairman and CEO, Jamie Dimon, have been splashed across the headlines of the business press. First he was the Wall Street hero who came through the 2008 financial crisis unscathed. He sprinkled the phrase “fortress balance sheet” throughout his media interviews. He lectured Washington against over-regulating big banks (despite the fact they had just collapsed the largest economy in the world). He called international plans to require more bank capital reserves “anti-American.” He was the reigning King of Wall Street and he relished the limelight.  And then, in an instant, the King’s crown was tarnished. His glib tongue uttered the immortal words “tempest in a teapot” over outsized bets by his derivatives traders in London, only to have to eat back that phrase, letter by letter, billion by billion in reported losses over the … Continue reading →

By Pam Martens: May 23, 2013  There are IRS scandals and then there are IRS Scandals – with a capital S. Last year, we reported on the capital S kind. For decades, billionaires Charles and David Koch had secretly owned shares giving them 50 percent ownership of the Cato Institute – a 501(c)(3) nonprofit organization subsidized by the taxpayer — while pushing a deregulatory agenda for big business. Today, Cato is functioning as a megaphone to spin the current flap over the IRS to advance its agenda.  Before the news broke in 2012 of the Kochs’ ownership in Cato, most of America believed that nonprofits could not be owned by individuals and were required under the law to have a freely elected Board of Directors. (Charles Koch had found a loophole in the law in Kansas where Cato was originally formed.) The Internal Revenue Service warns that charitable organizations like the … Continue reading →

By Pam Martens: May 22, 2013  On February 25, 2013, James Hepburn, writing at Daily Kos, made the emphatic assertion in a headline that “Big Tobacco Had Nothing to Do With Tea Party Formation.” That is likely to be the one headline that will haunt Mr. Hepburn to his grave.  I decided to follow in the treacherous footsteps of the IRS and engaged in that unforgiveable sin: I targeted the “tea party” as a key word search at the legacy tobacco document archive.  Resting quietly in the archive is full blown proof that Big Tobacco directly created multiple Tea Parties in 1994 as push back against a planned increase in the Federal Excise Tax (FET) on cigarettes.   In fact, Big Tobacco not only created the Tea Party, it has promoted it over decades, pumped millions into marketing it, and pulled it out of its magic hat every time it needed … Continue reading →