Search Results for: Federal Reserve

By Pam Martens and Russ Martens: June 6, 2022 ~ Last month the Federal Reserve Bank of New York released its 2021 annual report from its “Markets Group.” That’s the group that operates a trading floor (complete with speed dials to the trading houses on Wall Street) at the New York Fed, located not far from the New York Stock Exchange, as well as another trading floor on the premises of the Chicago Fed, which is not far from the futures exchanges in Chicago. That report showed that despite all of the recent talk about the Fed dramatically shrinking its balance sheet from its current size of $8.9 trillion, the internal Federal Reserve plan for the balance sheet is actually this: “After declining by about $2.5 trillion from the peak size reached in the first half of 2022, the portfolio stops declining in mid-2025, at which point it is held constant … Continue reading →

By Pam Martens and Russ Martens: June 1, 2022 ~ Wall Street On Parade was previously a big fan of Senator Sherrod Brown, the Chair of the Senate Banking Committee. Not so much anymore. Brown supported the nutty nomination of Saule Omarova to head the Office of the Comptroller of the Currency (OCC), the regulator of national banks, while attempting to spin the naysayers as part of a smear campaign. So far this year, the Senate Banking Committee has held hearings on tangential areas while ignoring the biggest threats to financial stability in the U.S.: the $200.18 trillion in notional derivatives (face amount) concentrated at just five Wall Street megabanks (JPMorgan Chase, Citigroup, Goldman Sachs, Morgan Stanley and Bank of America). There have been no subpoenas flying from the Senate Banking Committee as the Fed continues to cover up the largest trading scandal in its history and refusing to release to … Continue reading →

By Pam Martens and Russ Martens: May 31, 2022 ~ Credit union and banking trade groups have released a joint letter to the chair and ranking member of the House Financial Services Committee, warning of “devastating consequences” if the Federal Reserve moves forward with a Central Bank Digital Currency (CBDC). The letter was sent on May 25, one day before the Committee convened a hearing on “Digital Assets and the Future of Finance: Examining the Benefits and Risks of a U.S. Central Bank Digital Currency.” That hearing took testimony from only one witness, Lael Brainard, the Vice Chair of the Federal Reserve. The fact that credit unions, which frequently serve unionized labor, joined with banking trade groups to sign off on the letter, lends credibility to the “devastating consequences” the letter enumerates of a Central Bank Digital Currency. A CBDC would allow the Federal Reserve to compete for deposits with credit … Continue reading →

By Pam Martens and Russ Martens: May 26, 2022 ~ On Tuesday, the New York Fed’s trading desk released its annual report showing what it was up to in 2021. The New York Fed is the only one of the Federal Reserve’s 12 regional Fed banks to have a trading desk operation with speed dials to Wall Street’s trading houses, so we’re always interested in reading the “official” version of what’s been happening there. The report is a deeply sanitized version of the facts on the ground. (For example, there is nothing in the report to indicate that the New York Fed has established a second trading floor near the futures exchange in Chicago.) However, there is one paragraph in the newly-released report that took our breath away. It reveals that the New York Fed’s trading operation (officially called the System Open Market Account or SOMA) currently owns 38 percent of … Continue reading →

By Pam Martens and Russ Martens: May 20, 2022 ~ Yesterday the Senate Banking Committee held a hearing to consider President Biden’s nominations for two Commissioners at the Securities and Exchange Commission (Jaime E. Lizárraga and Mark Toshiro Uyeda) as well as Michael Barr to be Vice Chairman for Supervision at the Federal Reserve Board of Governors. (For the skinny on Barr’s fitness to supervise megabanks on Wall Street, see our hold-your-nose report here and David Dayen’s eyepopping report here.) During the hearing, Senator Elizabeth Warren noted the vast amounts of money that investors have lost in crypto coins and cryptocurrency and then moved on to compare the lack of protections that investors have in crypto versus the protections afforded in the stock market. Warren asked Barr the following: Warren: “If I bought a company’s stock, even the most hyped-up, junkiest one listed on the New York Stock Exchange, could I … Continue reading →

By Pam Martens and Russ Martens: May 19, 2022 ~ This past Tuesday, Federal Reserve Chair Jerome Powell sat for an interview with Wall Street Journal reporter Nick Timiraos as part of the newspaper’s “Future of Everything Festival.” During that interview, Powell told Timiraos that U.S. markets “are orderly, they’re functioning.” The precise exchange went as follows: (Watch it at 24:38 on YouTube video here.) Timiraos: “A Number of people have suggested to me the one thing that might slow you down or at least make this much more difficult would be some kind of market cataclysm. I wonder, in part, if that is why you are trying to be more transparent, not erratic, making sudden moves on your policy moves. My question there is, where’s your level of concern that financial stability and controlling inflation by raising interest rates, maybe a lot, might be fundamentally incompatible in that raising rates … Continue reading →

By Pam Martens and Russ Martens: May 18, 2022 ~ The March 15-16 minutes of the Federal Open Market Committee (FOMC) of the Federal Reserve show that there was agreement, given “elevated inflation and tight labor market conditions,” that the Fed needed to take decisive action to shrink its balance sheet, with FOMC participants reaffirming “that the Federal Reserve’s securities holdings should be reduced over time in a predictable manner primarily by adjusting the amounts reinvested of principal payments….” But Jerome Powell’s Fed did not actually announce a specific plan to shrink its balance sheet until May 4 and stated at that time that the plan would not go into effect until June 1 – almost three months after the FOMC indicated that the Fed should take decisive action. As a result of this stalling, the Fed’s balance sheet has remained at the $9 trillion level since its March 15-16 FOMC … Continue reading →

By Pam Martens and Russ Martens: May 17, 2022 ~ Tongues are wagging this morning about the 13F filing by Warren Buffett’s Berkshire Hathaway. The filing shows that in the first quarter of this year, Berkshire Hathaway bought 55,155,797 shares of Citigroup stock for its portfolio, which came to the tidy sum of $2.9 billion as of March 31, 2022. The tongue-wagging stems from the fact that over the past 52 weeks, Citigroup’s stock has lost 40 percent of its value, with no sign that the bleeding will stop anytime soon. Citigroup closed at $53.40 a share on March 31. It closed yesterday at $47.46. That means that Buffett’s wager on Citigroup is down 11 percent or a loss of $327.6 million so far. Knowing Citigroup’s history, things are highly likely to go from bad to worse from here. As Wall Street On Parade reported just last Friday, Citigroup’s Stock Price … Continue reading →

By Pam Martens and Russ Martens: May 13, 2022 ~ On January 2, 2008, the first trading day of the year that would become the biggest Wall Street crash since the Great Depression, Citigroup’s shares closed at $28.92. Yesterday, Citigroup’s shares closed at $4.66 (adjusted for the 1-for-10 reverse stock split the company did on May 9, 2011). That means that shareholders who have hung on to the stock for the past 14 years are still down 84 percent. In terms of assets, Citigroup is the third largest bank holding company in the U.S. with $2.29 trillion in assets as of December 31, 2021. (JPMorgan Chase and Bank of America rank first and second with $3.7 trillion and $3.2 trillion in assets, respectively, as of the same date according to the Office of the Comptroller of the Currency.) Despite the fact that Citigroup blew itself up in 2008 with off-balance-sheet subprime … Continue reading →

By Pam Martens and Russ Martens: May 12, 2022 ~ Yesterday, Thomas Falk and Claudia Aguirre, who were co-chairing the Dallas Fed’s Search Committee, announced that they had found the ideal candidate to become the new Dallas Fed President. They said it was a person who would “understand the economic issues and needs of the residents of Texas, northern Louisiana and southern New Mexico,” the areas served by the Dallas Fed. Given that criteria, one might have suspected that their candidate would have some relationship with Texas or its neighboring states. But no. Falk and Aguirre selected a person who works 1500 miles from the Dallas Fed, Lorie Logan, the head of the trading desks for the New York Fed, the only one of the 12 regional Fed banks to have trading desks (one in New York near the New York Stock Exchange and one in Chicago near the futures exchange). … Continue reading →