By Pam Martens and Russ Martens: June 12, 2023 ~ A dangerous malignancy has been growing on the U.S. banking system for at least two dozen years: It’s the job function benignly called the “Relationship Manager.” In October 2013, Carmen Segarra, a lawyer and former Bank Examiner at the Federal Reserve Bank of New York, filed a federal lawsuit alleging that Relationship Managers there, who were assigned to delicately manage relationships between the New York Fed and the powerful Wall Street banks, had obstructed and interfered with her investigation of Goldman Sachs and tried to bully her into changing her negative findings. When Segarra refused to change her examination, she was fired, according to a federal lawsuit she filed. In 2018, Segarra provided a more detailed accounting of how these corrupted relationships play out in her book, Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street. Given the influence that … Continue reading →

By Pam Martens and Russ Martens: June 8, 2023 ~ Yesterday, news headlines blared that New York City had the worst air quality in the world, as an eerie brownish-orange haze enveloped the city and Long Island. Photographs that looked more like scenes from a sci-fi movie popped up all over Twitter. Daytime took on a nighttime quality as streetlights automatically flipped on. Outdoor activities of all kinds were cancelled: the New York Yankees and Philadelphia Phillies cancelled their home games that had been scheduled for Wednesday; schools banned outdoor activities on playgrounds; millions of Americans living in the Northeast United States were cautioned to remain indoors. The Governor of New York State, Kathy Hochul, announced she was distributing one million N95 masks – a flashback to the hellish life of New Yorkers in 2020 and 2021 as the COVID-19 pandemic engulfed the city and the overflowing bodies of COVID victims … Continue reading →

By Pam Martens and Russ Martens: June 7, 2023 ~ It’s only June 7, but the liquidating, federally-insured, crypto-loving Silvergate Bank is having one helluva month. On June 1, the Federal Reserve released an enforcement action (called a Cease and Desist Consent Order) that it and a California banking regulator had filed against Silvergate Bank and its parent, Silvergate Capital Corporation. (See our report: Disgraced Silvergate Bank Hints It May Not Be Able to Cover All of Its Deposits; Fed Slaps It with a Cease and Desist Consent Order.) The bank had announced on March 8 that it was going to voluntarily wind down and liquidate itself. The announcement followed a run on the bank when news articles began appearing linking Silvergate Bank to indicted crypto kingpin, Sam Bankman-Fried. The bank is facing a growing roster of lawsuits on charges that it moved customer funds deposited at Bankman-Fried’s crypto exchange, FTX, to … Continue reading →

By Pam Martens and Russ Martens: June 6, 2023 ~ As we reported yesterday, Silicon Valley Bank was not even on the “Problem Bank List” maintained by the Federal Deposit Insurance Corporation (FDIC) when it imploded in a span of 48 hours in March. According to testimony by the Federal Reserve’s Vice Chairman for Supervision, Michael Barr, on March 28 before the Senate Banking Committee, depositors had yanked $42 billion of their deposits from the bank on March 9 and had queued up to grab another $100 billion on March 10 when it was abruptly put into FDIC receivership. Had the FDIC not stepped in, Silicon Valley Bank would have lost 85 percent of its deposits in a two-day stretch. Two of the key internal problems at Silicon Valley Bank were its large amount of uninsured deposits (which pose a flight risk in times of banking turmoil) and Silicon Valley Bank’s … Continue reading →

By Pam Martens and Russ Martens: June 5, 2023 ~ The second, third, and fourth largest bank failures in U.S. history occurred this year. And yet, none of the banks that blew up were on the “Problem Bank List” that is prepared quarterly by the federal bank regulator that is supposed to be on top of these things – the Federal Deposit Insurance Corporation (FDIC). When the FDIC released its quarterly Problem Bank List for the quarter ending December 31, 2022, it showed just 39 banks were a problem with combined assets of a meager $47.5 billion. Given that rosy picture, one can understand the shock to the American people when Silicon Valley Bank blew up on March 10 with $212 billion in assets and had to be put into FDIC receivership. Two days later, on March 12, Signature Bank failed and was put into FDIC receivership. As of December 31, … Continue reading →

By Pam Martens and Russ Martens: June 2, 2023 ~ Last week, on Tuesday, May 23, the Federal Reserve and California Department of Financial Protection and Innovation (the state banking regulator) hit the collapsed federally-insured bank, Silvergate Bank, and its parent, Silvergate Capital Corporation, with an enforcement action called a “Cease and Desist Consent Order.” The action was not announced to the public until yesterday. A Consent Order is meant to function along the lines of a legal settlement, with the bank agreeing to the detailed terms of the Consent Order and waiving its right to judicial review. The individual signing the Consent Order on behalf of the bank was its controversial CEO, Alan Lane, who had allowed his federally-insured bank to get in bed with Sam Bankman-Fried’s house of frauds, including the FTX crypto exchange and Bankman-Fried’s hedge fund, Alameda Research. Lane also had allowed his deposit base to become … Continue reading →

By Pam Martens and Russ Martens: June 1, 2023 ~ After much delay and legal protests by JPMorgan Chase, its Chairman and CEO, Jamie Dimon, was forced by a Manhattan federal court to testify under oath in a deposition about what he personally knew about the bank’s long-term customer relationship with child sex trafficker Jeffrey Epstein. (Epstein died in a Manhattan jail on August 10, 2019. His death was ruled a suicide by the medical examiner.) The deposition was held last Friday, May 26, at the offices of JPMorgan Chase in Manhattan. In a surprise move, opposing counsels agreed yesterday to release the transcript of the deposition, with some segments marked as sensitive and redacted. The deposition arose as a result of two lawsuits being heard by Judge Jed Rakoff in the U.S. District Court for the Southern District of New York. One lawsuit is on behalf of an alleged sexual … Continue reading →

By Pam Martens and Russ Martens: May 31, 2023 ~ Last Friday, at the start of Memorial Day weekend, researchers at the International Monetary Fund (IMF) released an analysis of where they think the U.S. economy is headed and the headwinds (read gale force winds) that can, potentially, be expected along the way. Folks on Wall Street who were hoping that the Fed was at the end of its rate-hiking cycle, with a more dovish Fed juicing stock market returns later this year, likely had their holiday weekend ruined with this projection from the IMF: “Achieving a sustained disinflation will necessitate a loosening of labor market conditions that, so far, has not been evident in the data. To bring inflation firmly back to target will require an extended period of tight monetary policy, with the federal funds rate remaining at 5¼–5½ percent until late in 2024.” The Fed’s inflation target is … Continue reading →

By Pam Martens and Russ Martens: May 30, 2023 ~ Wall Street mega banks, as well as others, are moving vast amounts of their debt securities from one accounting category to another accounting category in order to stretch out unrealized losses over the life of the instrument. As the FDIC chart above indicates, as of December 31, 2022 unrealized losses on investment securities at U.S. banks stood at more than $600 billion. According to JPMorgan Chase’s 10-K (Annual Report) filings with the Securities and Exchange Commission, over the past three years it has moved a total of $347 billion (yes, “billion” with a “b”) of investment securities from the accounting category called “Available-for-Sale” (AFS) to the accounting category called “Held-to-Maturity” (HTM). JPMorgan Chase’s 2022 10-K advises as follows: “During 2022 and 2021, the Firm transferred $78.3 billion and $104.5 billion of investment securities, respectively, from AFS to HTM for capital management purposes.” JPMorgan … Continue reading →

By Pam Martens and Russ Martens: May 25, 2023 ~ Unlike his three immediate predecessors who chaired the Federal Reserve (Janet Yellen, Ben Bernanke and Alan Greenspan), who all had doctoral degrees in economics, the current Fed Chairman, Jerome Powell, has a law degree from Georgetown University. Given his legal education, one might have expected that when Fed Chair Powell became aware of the largest trading scandal in the Fed’s history in September of 2021, he would have done his legal due diligence to determine where to refer the matter for investigation. While multiple Wall Street watchdogs called for Powell to refer the investigation to the U.S. Department of Justice and the Securities and Exchange Commission – which conduct all legitimate insider trading investigations involving publicly-traded stocks — the Fed instead referred the investigation on October 4, 2021 to the Federal Reserve Board’s own Inspector General, who is appointed by the … Continue reading →