By Pam Martens: December 12, 2012  Yesterday, Lanny Breuer, the Assistant U.S. Attorney General for the criminal division of the Justice Department, appeared on CNBC to defend the deferred prosecution agreement with the global banking giant, HSBC – a deal which settled drug money laundering and other crimes for $1.9 billion without prosecuting any HSBC employee.  What Breuer was effectively defending was the five years that his former law partner, John Dugan, was HSBC’s primary banking regulator and did nothing to rein in the outrageously lawless behavior at the bank.  Dugan headed the Office of the Comptroller of the Currency (OCC), which regulates all national banks, from August 4, 2005 through August 14, 2010.  During that period, according to the Senate Permanent Subcommittee on Investigations, the OCC turned a blind eye to abuses at HSBC. In fact, it was not until Dugan left the OCC that a report was issued in … Continue reading →

By Pam Martens: December 11, 2012  On July 17 of this year, the Senate Permanent Subcommittee on Investigations released a 330-page report on banking giant HSBC, together with 100 documents and internal emails, evincing a culture of hubris and potentially criminal actions when it came to U.S. banking laws.   Today, the U.S. Department of Justice and multiple other U.S. regulators will tie all that up with a tidy red bow for a settlement of $1.921 billion; a small nick in HSBC’s profits of $22 billion last year. HSBC released a statement saying it was “profoundly sorry.”  During the July 17 Senate hearing on HSBC, Subcommittee Chairman, Carl Levin, questioned Chistopher Lok, the former head of global banknotes at HSBC Bank USA, about internal emails from HSBC that the Senate had in its possession.  In the first email, a subordinate tells Lok that a proposed bank customer has a “know your customer” … Continue reading →

By Pam Martens: December 10, 2012  This past Friday, the Securities and Exchange Commission (SEC) brought an enforcement action against an alleged Miami fraudster, Claudio Osorio, and his accountant, Craig Toll, whom it charged with swindling $16.8 million from five duped investors based on a series of outrageous lies about their startup company. Now, thanks to Congress and its second worst financial idea since the repeal of the Glass-Steagall Act in 1999, things just got a lot easier for stock charlatans.  In April, President Obama signed into law the Jumpstart Our Business Startups Act (JOBS Act).  The title of the legislation tells you all you really need to know: this Congress will pass the most horrific piece of anti-consumer, anti-investor legislation if it has a flag-waving title and enough special interest money backing it.  The goal of the legislation is in keeping with the grotesque mindset of Washington: in the midst … Continue reading →

By Pam Martens: December 7, 2012  It seems like a day doesn’t go by that an advertisement from Ken Fisher doesn’t pop up on my laptop when I’m visiting a business news web site.  It’s been going on for months.  The ads suggest that I’ll be doomed if I don’t read the latest report from Ken Fisher; it’s a “must read” with research and analysis “you can’t find anyplace else.” And, by the way, if you don’t have $500,000 or more to invest, just fuhgeddaboutit.  Yesterday, I decided to check out this fellow and find out how he can afford all these ads.  Turns out, this Ken Fisher is the financial columnist for Forbes magazine and has defied the destiny of most other business writers in America by becoming a billionaire — worth $1.8 billion as of September 2012 according to Forbes.  But Fisher is not your average 1 percenter – he … Continue reading →

By Pam Martens: December 6, 2012 (This column, with updates, runs periodically at Wall Street on Parade. Please consider emailing it to friends and family members.) A study conducted by Edward N. Wolff for the Levy Economics Institute of Bard College in March 2010 made the following findings: The richest 1 percent received over one-third of the total gain in marketable wealth over the period from 1983 to 2007. The next 4 percent also received about a third of the total gain and the next 15 percent about a fifth, so that the top quintile collectively accounted for 89 percent of the total growth in wealth, while the bottom 80 percent accounted for 11 percent. Debt was the most evenly distributed component of household wealth, with the bottom 90 percent of households responsible for 73 percent of total indebtedness. Wealth concentration in too few hands while the general populace is … Continue reading →

By Pam Martens: December 5, 2012 On Monday, the SEC announced it was going to study decimalization — that’s the pricing of stocks in pennies instead of using the historic practice of pricing stocks in fractions.  What the SEC really means is that it is going to study the death of IPOs on U.S. stock exchanges, how that is contributing to the death of jobs in the economy, and how all of that may rest at the doorstep of high frequency traders who remain in business only because of the pricing of stocks in pennies.  If stocks were priced in fractions, it would be far too expensive for high frequency traders to exist.  There are two words to explain this sudden exuberance by outgoing SEC Chair Mary Schapiro.  Those two words are: Grant Thornton.  The big accounting firm has been making waves with a comprehensive study on the sickly listing … Continue reading →

By Pam Martens: November 4, 2012  On December 23 of this year, the Federal Reserve will be 99 years old.  And throughout that 99 years, regardless of boom, bust, recession or Great Depression, the biggest Wall Street banks have been enjoying a 6 percent, risk-free return on the capital they hold at the Fed in the form of dividends.  Have you looked at your checking or money market bank statement lately from JPMorgan Chase or Citibank? How about the statement showing the interest you’re earning on your mortgage escrow account with the big banks? While the country suffers through the lingering effects of the Great Recession caused by the biggest Wall Street banks, the public typically receives less than 1 percent on their deposits at the big banks, while the government has legislated a permanent, risk-free 6 percent guarantee to the Wall Street banks for their capital on deposit at … Continue reading →

By Pam Martens: December 3, 2012 In what can only be described as an unseemly marriage of the plundering herd on Wall Street and the so-called paper of record assigned with the arduous task of delivering unbiased investigative reports to the public, the New York Times has made the deeply unwise decision to hold “The Inaugural DealBook Conference.”    The all-day conference to be held at the New York Times Center on December 12, headlines Jamie Dimon, Chairman and CEO of JPMorgan Chase – a company under serious Federal investigation on multiple fronts — and Lloyd Blankfein, Chairman and CEO of Goldman Sachs, a company which faces multiple lawsuits alleging investors were defrauded and which paid $550 million two years ago to settle SEC charges that it knowingly harmed its own clients. The Times’ business writer, Andrew Ross Sorkin, appears to be the official host of the conference, delivering the opening welcome alongside Arthur … Continue reading →

By Pam Martens: November 30, 2012  Congress and the President should rightfully be concerned about the dramatic decline in young, small businesses coming to market as initial public offerings. These are, hopefully, the innovative small businesses that will fuel the jobs of tomorrow.  But as investments to stockholders, they lack a key element.  According to the U.S. Small Business Administration, small businesses:  • Represent 99.7 percent of all employer firms. • Employ about half of all private sector employees. • Pay 43 percent of total U.S. private payroll. • Have generated 65 percent of net new jobs over the past 17 years. • Create more than half of the nonfarm private GDP. • Hire 43 percent of high tech workers (scientists, engi­neers, computer programmers, and others). • Produce 16.5 times more patents per employee than large patenting firms.  Unfortunately for stock market investors, young companies typically do not pay any dividends, opting … Continue reading →

By Pam Martens: November 29, 2012 It took the New York Times 12 years to admit it was dead wrong to run editorials urging the repeal of the Glass-Steagall Act, the depression-era investor protection legislation that prevented Wall Street from collapsing the financial system for 75 years. (It took just 9 years from the date of repeal in 1999 for Wall Street to thoroughly corrupt the system, wreck the economy and collapse century old Wall Street firms.) One would have expected the New York Times to have acquired a little humility from its prior ill-informed meddling with Wall Street regulation. Nothing doing. The Times, together with Bloomberg News and the Wall Street Journal have all magically decided to push Sallie Krawcheck out in front as the leading contender to become the permanent new Chair of the Securities and Exchange Commission, despite Krawcheck’s lack of a securities law degree (or any other … Continue reading →