By Pam Martens: August 21, 2013 The last 30 days have been pretty much the summer from hell for the Obama administration’s efforts to shore up confidence that its policing of Wall Street is producing results. Still under multiple investigations for rigging the interest rate benchmark known as Libor, we learned late last month that Wall Street’s largest firms have also gained effective control of the London Metal Exchange and are causing financial damage to the economy by hoarding aluminum in metal warehouses. On top of that, JPMorgan recently paid a $410 million fine for rigging electricity markets in California and the Midwest while two of JPMorgan’s traders were just criminally indicted for their role in the infamous London Whale matter where $6.2 billion of bank deposits were lost in a wild trading scheme. Certainly no slouch, Goldman Sachs is holding up its end in the busting of public confidence … Continue reading →

By Pam Martens: August 20, 2013 The White House issued a statement yesterday on the President’s meeting with the federal agencies that regulate Wall Street. Curiously, the phrase used to describe the agencies was “independent regulators.” The President’s Deputy Press Secretary, Josh Earnest, held a press briefing with reporters yesterday, taking questions on the meeting. In that briefing, Earnest referred to the regulators as “independent” seven times. If the President now finds it necessary to attempt to brainwash the American public through endless repetition of the word “independent” to shore up sagging public doubt that there are any real cops on the beat when it comes to policing Wall Street, he has no one to blame but himself. When President Obama appointed Mary Jo White to head the Securities and Exchange Commission (SEC), Jack Lew for U.S. Treasury Secretary, and has floated the idea for weeks that Larry Summers could … Continue reading →

August 19, 2013 This afternoon, the White House released the following statement on what transpired at the 2:15 p.m. meeting today between the President and Wall Street regulators. According to the President’s daily schedule printout, the meeting took place in the Roosevelt Room. We will have significantly more to say on this subject tomorrow. ~~~ “This afternoon, President Obama hosted a meeting with lead independent financial regulators.  In addition to White House staff, participants include the Comptroller of the Currency, the Director of the Consumer Financial Protection Bureau (CFPB), the Acting Director of the Federal Housing Finance Agency (FHFA), and the chairs of the Board of Governors of the Federal Reserve System (FRB), the Commodity Futures Trading Commission (CFTC), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration, and the Securities and Exchange Commission (SEC).  Treasury Secretary Jack Lew also attended the meeting. “The President and the regulators … Continue reading →

By Pam Martens: August 19, 2013  On January 16 of this year, Richard Fisher, President of the Federal Reserve Bank of Dallas, delivered a speech on the continuing threat to the U.S. economy posed by the too-big-to-fail banks. Fisher said: “I submit that these institutions, as a result of their privileged status, exact an unfair tax upon the American people. Moreover, they interfere with the transmission of monetary policy and inhibit the advancement of our nation’s economic prosperity.”  As part of his talk, Fisher presented a chart showing the Frankenbank nature of the five largest banks in the U.S. – JPMorgan, Bank of America, Goldman Sachs, Citigroup, and Morgan Stanley. Cumulatively, these five banks are the parent to 19,654 subsidiaries or affiliates while their nondeposit liabilities total over $4.1 trillion – a figure equal to 26.3 percent of the Gross Domestic Product (GDP) of the country.  On July 23, 2013, the … Continue reading →

By Pam Martens: August 15, 2013 New York University, under withering public criticism following media disclosures that it was providing mortgage loans on vacation homes (which it frequently forgave) to elite administrators and faculty, has announced it will limit mortgage loans in the future to primary residences. In the same announcement, the University said John Sexton, NYU’s President who has received no-confidence votes from five NYU schools, will remain in his position until his current contract expires in 2016. Wall Street on Parade, the New York Times, and the New York Post have highlighted in multiple articles the lack of financial accountability at NYU. Senator Chuck Grassley took the Congressional lead in the matter when he learned during the Senate confirmation hearing of Jack Lew, President Obama’s nominee for U.S. Treasury Secretary, that NYU had given Lew more than $1 million in loans to buy a home in Riverdale, New York, and … Continue reading →

By Pam Martens: August 15, 2013  Yesterday, the popular New York Times columnist, Maureen Dowd, weighed in on the potential nod by President Obama to Larry Summers for Chairman of the Federal Reserve. Dowd writes with the political intuition and confidence of someone who has a Pulitzer on her shelf and three decades under her belt at the New York Times.  Dowd thinks the idea for Summers for Fed chief is being pushed by “a bunch of alpha males who prefer each others’ company and who all flatter themselves that they’re smart enough to know how smart Summers is.” Among that group, Dowd lists former Treasury Secretary Robert Rubin, who teamed up with Summers in the Clinton administration to push for bank deregulation and “paved the way for the country’s ruin.”  Driving this untenable push to place Summers atop the most critical monetary seat in America is, according to Dowd, … Continue reading →

With criminal charges imminent, we look back on reporting of the London Whale revelations at Wall Street On Parade.  Personal Investing Lessons From JPMorgan’s London Whale Debacle  Despite a multitude of formulas for measuring risk, multiple layers of oversight management, 28 members of a risk management team with titles like Managing Director, Executive Director, and Vice President, it somehow didn’t occur to any of these folks that the number one criteria for a trading investment is that you need to be able to get out of it. Continue Reading…  JPMorgan: Poster Child for the Most Dangerous Financial System Since 1929 Last Friday, Senator Carl Levin told the Senate’s Permanent Subcommittee on Investigations that JPMorgan “piled on risk, hid losses, disregarded risk limits, manipulated risk models, dodged oversight, and misinformed the public.” And here’s the punch line: that’s not even the worst of what JPMorgan did. Continue Reading…  The Other Thing JPMorgan Was … Continue reading →

By Pam Martens: August 13, 2013  Qu’est-ce que c’est? Frenchmen?  In the quintessentially American male testosterone epicenter known as Wall Street, Frenchmen are dropping like flies. Not so much the American CEOs in Wall Street’s corner offices. The only handcuffs these guys are seeing are the golden ones.  Fabrice Tourre, the 34-year old Goldman Sachs salesman from an elite educational background in France, was found guilty of six counts of securities fraud in a Manhattan jury trial that ended 12 days ago. The case was a civil suit brought by the Securities and Exchange Commission. One of those counts was for “aiding and abetting” Goldman Sachs in the fraud. Goldman Sachs did not stand trial, in the technical sense although it certainly has in the court of public opinion, because it settled its charges with a payment of $550 million. Not only did the corporation not stand trial, but neither … Continue reading →

By Pam Martens: August 12, 2013  Let’s put aside for a moment the patently ridiculous question of whether Larry Summers is fit to Chair the Federal Reserve. (Summers is one of the key officials in the Clinton administration who bullied policy makers and won the repeal of the Glass-Steagall Act and prevented the regulation of derivatives, ushering in the financial collapse of 2008. That President Obama has publicly acknowledged that he is considering Summers for the highest monetary post in the U.S. underscores the administration’s serial ability to insult public sensibilities when it comes to Wall Street.)  Even if Summers does not get the nod from the President for Fed Chair, he’s back to his dangerous tinkering with the financial infrastructure of the country. Within the past four days, the New York Times has published two articles, including one on its front page, noting Summers’ involvement with a start-up company … Continue reading →

By Pam Martens: August 8, 2013  If a major Wall Street firm is being investigated by the Securities and Exchange Commission (SEC), that’s one thing. The SEC has no criminal powers to prosecute. And when it comes to Wall Street mega banks, there is a long tradition of fines and slaps on the wrist rather than prosecutions.  But when there is an open investigation by the Department of Justice, which does possess the power to criminally prosecute, there should be concern in the marketplace, if for no other reason than the fact that there is significant public attention being paid to the DOJ’s failure to prosecute big Wall Street firms.  Yesterday, JPMorgan Chase filed its quarterly 10Q with the SEC. If ever there was a document making a convincing case for breaking up the big banks and restoring the Glass-Steagall Act, this is it.  JPMorgan reported it is under investigation … Continue reading →