By Pam Martens: March 19, 2013 Gambling on high-risk synthetic credit derivatives is not the only area of interest at JPMorgan’s  Chief Investment Office (CIO) – the division that has thus far admitted to losing $6.2 billion in the London Whale debacle. According to Exhibit 81 released by the U.S. Senate’s Permanent Subcommittee on Investigations, Ina Drew, the head of the CIO, was also overseeing the investment of funds in the firm’s Bank Owned Life Insurance (BOLI) and Corporate Owned Life Insurance (COLI) plans – a scheme enshrined by the U.S. Congress in 2006 that allows too-big-to-fail banks as well as many other corporations to reap huge tax benefits by taking out life insurance policies on workers – even low wage workers – and naming the corporation the beneficiary of the death benefit. According to the exhibit, Drew was tasked with “Maximization of tax-advantaged investments of life insurance premiums” for … Continue reading →

By Pam Martens: March 18, 2013  The 307-page report the Senate released last Thursday on JPMorgan’s cowboy culture was deeply unsettling; the testimony under oath at the related Senate hearing on Friday was equally shocking with eyewitness accounts confirming that CEO Jamie Dimon ordered the withholding of  financial data to a regulator while both he and the Chief Financial Officer at the time, Douglas Braunstein, presented an Alice in Wonderland version of facts to the public in April 2012.  But it now appears that the worst of this story may be so unsettling to the markets and the public perception of Wall Street that it must be censored from public viewing. Throughout the Senate Permanent Subcommittee on Investigation’s 98 exhibits of emails and internal memos on the wild trading schemes at JPMorgan, the word “Redacted” appears.  In a high number of the areas where the material is censored, it concerns … Continue reading →

By Pam Martens: March 15, 2013  Much of the investing public, and I would venture many members of the research team at the Senate’s Permanent Subcommittee on Investigations that compiled the 307 page report on JPMorgan’s $6.2 billion in losses from the London Whale trade, are unaware that the company’s Chairman and CEO, Jamie Dimon, learned at the knee of the mastermind of too-big-to-fail – former Citigroup Chairman and CEO, Sandy Weill. From 1982 to 1998, Dimon was Weill’s first lieutenant, rising to the rank of President of Citigroup.  Carl Levin, Chairman of the Subcommittee, released the stunning investigative report yesterday and, throughout, the level of arrogance toward regulators, the dishonesty and dissembling on earnings calls, the hiding of losses, and the specter of the imperial CEO conjured up images of the downfall of Citigroup and Weill’s role in creating the culture than burned down the house. It felt, alarmingly, like … Continue reading →

By Pam Martens: March 14, 2013 When Wall Street wants to sell junk bonds to the public – those corporate bonds trading below an investment grade rating – a BBB rating by Standard and Poor’s or Baa by Moody’s – it simply puts lipstick on a pig by renaming the bond fund a “High Yield” fund. Since February, Senator Chuck Schumer (D-NY) has been providing the same service to the U.S. Senate with his slobbering introductions of the nominees to head the U.S. Treasury and Securities and Exchange Commission without noting any of the high risks to installing these deeply conflicted individuals. Schumer’s most recent spectacle came this past Tuesday when he grinned and fawned through his introduction of Mary Jo White at her confirmation hearing before the Senate Banking Committee. Schumer felt it was relevant for the U.S. public to know that the future watchdog to oversee one of … Continue reading →

By Pam Martens: March 13, 2013 Americans learned for the first time on March 6 of this year that the highest law enforcement agent in our country, Attorney General Eric Holder, weighs economic interests when deciding whether to enforce our Nation’s laws against criminal wrongdoers like the too-big-to-fail banks. The spectacle of warped law enforcement grew worse today during the Senate Banking confirmation hearing of Mary Jo White to head the Securities and Exchange Commission. Under questioning by Senator Sherrod Brown (D-Ohio), White admitted that even the economy of a foreign country – like Japan – is taken into consideration before bringing a criminal indictment in the U.S.  Even worse, White was forced to admit that while working for the U.S. Department of Justice as the U.S. Attorney for the Southern District of New York (from 1993 to 2002), she considered it appropriate to speak with Larry Summers (a Treasury Secretary … Continue reading →

By Pam Martens: March 12, 2013    At a time when restoring trust in our financial system is critical to the Nation’s ability to grow, create jobs and restore consumer and investor confidence, President Obama has nominated two deeply conflicted individuals to head the U.S. Treasury Department and the Securities and Exchange Commission. Jack Lew has already been confirmed and sworn in as the new Treasury Secretary; Mary Jo White’s confirmation hearing will occur this morning before the Senate Banking Committee.  The process surrounding Jack Lew’s confirmation hearing appeared to have been stage-managed by an invisible hand to deny the public the right to learn of his mountains of questionable dealings in the private sector. Senator Orrin Hatch, speaking during debate by the full Senate on the confirmation of Lew, had this to say about the process:  “For well over a decade, the Finance Committee has followed a specified procedure when considering … Continue reading →

By Pam Martens: March 11, 2013  At 10 a.m. tomorrow, Mary Jo White, President Obama’s nominee for Chair of the Securities and Exchange Commission (SEC), will take her seat in the Dirksen Senate Office Building while the Senate Banking Committee goes through the motions of weighing her worthiness to serve. If confirmed, this will mark White’s fourth spin over 36 years through the revolving door at her corporate law firm, Debevoise and Plimpton.  White’s husband, John W. White, has had only one-spin through the revolving door – but it tells us a great deal about why Wall Street remains unrepentant and continues to pillage and plunder. On March 5, 2005, John W. White, partner at the international law firm Cravath, Swaine & Moore LLP, which represents Wall Street firms and large corporations around the world, was not at all happy with Section 404 of the Sarbanes-Oxley Act.  That’s the part of … Continue reading →

By Pam Martens: March 8, 2013  For years I’ve used the phrase “Frankenbanks” in my articles – those global banking behemoths created as a result of the repeal of the Glass-Steagall Act in 1999 that allow the co-mingling of FDIC insured mom and pop savings accounts with investment banking activities that blow up things using the mom and pop savings accounts leveraged to the hilt. Now the U.S. Senate is making my case for me on the use of Frankenbanks as an appropriate soubriquet.  If we date the run up to the financial crisis as beginning in the summer of 2007, which the Office of the Comptroller of the Currency does, it is more than five years since Congress has been studying why Wall Street is very adept at blowing up things but adept at not much else – like its main job of fairly allocating capital to new companies that … Continue reading →

By Pam Martens: March 7, 2013  Paul Craig Roberts is one of the most prolific economic writers in America today. As a former Wall Street Journal editor and former Assistant Secretary of the Treasury, Roberts is a walking encyclopedia on monetary policy, economic theory and Wall Street history. After publication in Germany in 2012, his latest book, The Failure Of Laissez Faire Capitalism And Economic Dissolution Of The West, is now available in the U.S. as an eBook.  If you’ve read a Roberts’ column over the past few years, you know there’s nothing timid or constrained in his writing. The same can surely be said for this current work. Roberts expertly details how the one percenters have masterminded a political and economic takeover that just keeps on giving to the one percent as the economy wobbles, the U.S. debt explodes and the middle class is hollowed out.  Roberts sees the … Continue reading →

By Pam Martens: March 6, 2013  Corporate media was falling over itself yesterday to report new stock market highs for the Dow Jones Industrial Average. At 2 p.m., this is what the New York Times was reporting as a lead story on its web site:  “Despite everything, the stock market is back at a record high…Since a low point in March 2009, the Dow Jones index has more than doubled, stunning even the most seasoned stock market watchers. ‘What’s amazing about this bull market is that people still don’t think it’s real,’ said Richard Bernstein, chief executive of Richard Bernstein Advisors, a money management firm. ‘We think this could be the biggest bull market of our careers.’ ”  The seductive words in this piece are “record,” “stunning,” and “biggest bull market of our careers.” It’s like subliminal interlineations beckoning one to dip one’s toes into the water, even though we … Continue reading →