By Pam Martens and Russ Martens: December 1, 2022 ~ That $4 billion capital raise that was supposed to shore up confidence in global banking behemoth Credit Suisse turns out to have been too little, too late. Yesterday, 5-year Credit Default Swaps (CDS) on Credit Suisse blew out to 446 basis points. That’s up from 55 basis points in January and more than five times where CDS on its peer Swiss bank, UBS, are trading. The price of a Credit Default Swap reflects the cost of insuring oneself against a debt default by the bank. Who might be desperate to buy protection against a default by Credit Suisse and driving up the cost of that protection? The mega banks on Wall Street that are counterparties to its derivative trades come to mind, as well as hedge fund speculators. Things don’t look any brighter this morning for Credit Suisse. Its shares are … Continue reading →

By Pam Martens and Russ Martens: November 30, 2022 ~ You can’t make this stuff up. After promoting the false story that there were weapons of mass destruction in Iraq and pushing the U.S. into a deadly and costly war through its reporter, Judith Miller; and using its editorial board to shill for the repeal of the Glass-Steagall Act to advance the greedy Wall Street ambitions of Citigroup kingpin Sandy Weill, which ended up taking down the U.S. economy in 2008; the New York Times now appears determined to rehabilitate the reputation of the disgraced Sam Bankman-Fried, Co-Founder and recently ousted CEO of the bankrupt crypto exchange, FTX.  Bankman-Fried is being investigated on multiple continents, including North America, for stealing customer assets and looting his private investors. He has been compared, in headlines around the globe, to Bernie Madoff and his Ponzi scheme. Reuters reported that Bankman-Fried had moved as much as … Continue reading →

By Pam Martens and Russ Martens: November 29, 2022 ~ If there is one person in America who comprehensively understands the threats to the U.S. banking system, it is Arthur E. Wilmarth, Jr., author of the 2020 seminal book, Taming the Megabanks: Why We Need a New Glass-Steagall Act. Wilmarth is Professor Emeritus of Law at George Washington University Law School and has published more than 40 law review articles and book chapters in the fields of financial regulation and American constitutional history. Wilmarth had this to say about the way the Fed allowed a crypto outfit, SoFi, to scoop up a federally-insured bank in February of this year: “The San Francisco Fed relied on the same five-year transitional exemption in the BHC Act [Bank Holding Company Act] to allow SoFi to acquire Golden Pacific Bancorp and its national bank subsidiary despite SoFi’s nonconforming crypto trading activities. I find it astonishing and … Continue reading →

By Pam Martens and Russ Martens: November 28, 2022 ~ On November 17, Sheila Bair, the former Chair of the Federal Deposit Insurance Corporation (FDIC) during the financial crisis of 2008, went on CNBC to lament the lack of controls leading to the collapse of the crypto currency exchange, FTX. During the interview, Bair used the phrase “nobody looking behind the curtain.” But Bair, herself, is listed as an “Organizer/Director” of a crypto-related company called Paxos, where nobody can genuinely look behind the curtain because its parent, Kabompo Holdings Ltd., is based in the offshore secrecy jurisdiction of the Cayman Islands. According to the bare bones filings Kabompo has made with the Securities and Exchange Commission each time it has raised money from private investors, it has used an address that is a Post Office Box at Ugland House in Grand Caymen. According to a previous report from the Government Accountability … Continue reading →

By Pam Martens and Russ Martens: November 23, 2022 ~ The fallout from the collapse of the crypto exchange FTX and its missing billions of dollars of customer funds has, finally, galvanized some members of Congress to push back against the swarms of crypto lobbyists whose activities are clearly impacting the safety and soundness of U.S. banks. On Monday, Senator Sherrod Brown (D-OH), Chair of the Senate Banking Committee, along with Senators Jack Reed (D-RI), Chris Van Hollen (D-MD), and Tina Smith (D-MN), sent a letter to federal banking regulators warning that SoFi, a federally-insured bank, potentially posed a risk to safety and soundness as a result of its digital asset trading activities. The Senators wrote as follows: “In January 2022, SoFi received approval from the Federal Reserve for the acquisition of Golden Pacific Bancorp, Inc. and a conditional approval from the Office of the Comptroller of the Currency for the … Continue reading →

By Pam Martens and Russ Martens: November 22, 2022 ~ Two attorneys from the Department of Justice in Washington, D.C. have filed an appearance with the Bankruptcy Court in Delaware that is hearing the bankruptcy case filed by the disgraced crypto exchange, FTX, and its related hedge fund, Alameda Research. Both are majority-owned by the scandalized former crypto kingpin Sam Bankman-Fried. More than 100 other global tentacles of FTX are included in the bankruptcy case. The DOJ attorneys that made the notices of appearance are Seth Shapiro and Stanton McManus. The notice of appearance for both attorneys references two noteworthy statutes, 28 U.S.C. § 516 and 518, among others: 28 U.S.C. § 516 reads as follows: “Except as otherwise authorized by law, the conduct of litigation in which the United States, an agency, or officer thereof is a party, or is interested, and securing evidence therefor, is reserved to officers of … Continue reading →

By Pam Martens and Russ Martens: November 21, 2022 ~ On August 1 of this year, we penned this headline at Wall Street On Parade: Brace Yourself for Federally-Insured Bank Failures Caused by Crypto. Our research for that article was so stomach-churning and frightening that we emailed the article to key staff for the Senators who sit on the Senate Banking Committee. One of the banks we researched for that article was Silvergate Bank. We wrote: “FDIC-insured Silvergate Bank is part of the publicly-traded Silvergate Capital Corp., (ticker SI). Silvergate’s website says this about its hot pursuit of crypto: ‘We began pursuing digital currency customers in 2013 and have been deliberate in our approach to serving this community since then. Today, we have 1,300+ digital currency and fintech customers that are using our platform daily to grow and scale their businesses.’ “Silvergate Capital’s 10-K (annual report) for the year ending Dec 31, … Continue reading →

By Pam Martens and Russ Martens: November 17, 2022 ~ Just two business days after the crypto exchange FTX filed for bankruptcy and headlines swirled around the world suggesting it had used its crypto token to perpetuate a massive fraud reminiscent of Madoff’s Ponzi scheme, the New York Fed thought this would be an ideal time to announce it was launching a digital token pilot with the serial fraudster, Citigroup. (See here for the unintelligible, jargonized version from the New York Fed; here for the decrypted translation from CoinDesk; and here for a sampling of Citigroup’s rap sheet.) If the New York Fed teaming up with Citigroup isn’t troubling enough, the New York Fed also reveals that “ Legal services are being provided by Sullivan & Cromwell LLP….” for the pilot token project. (Why does one need to hire a Big Law firm for a pilot program using a “theoretical” concept?) … Continue reading →

By Pam Martens and Russ Martens: November 16, 2022 ~ On June 10 of last year, Wall Street On Parade penned this headline: Seven Years after Michael Lewis Described on National TV How the U.S. Stock Market Is Rigged, SEC Chair Gensler Says He’s Going to Tackle Market Structure. Unfortunately for confidence in U.S. markets, that’s yet to happen. And it’s not just the fault of Gensler. The Senate Banking Committee and House Financial Services Committee that should be holding in-depth hearings on the most corrupted market structure since 1929 have opted instead to hold superficial hearings each time something blows up as a result of that corrupted market structure, but never actually get around to tackling the corrupt market structure itself. So here we are today with another abject failure of market structure causing a week of sensational headlines around the globe that make U.S. markets look unhinged. If one … Continue reading →

By Pam Martens and Russ Martens: November 15, 2022 ~ The executives running the bankrupt crypto exchange, FTX, may have broken speed records for how fast they could spend other people’s money. They just weren’t any good at managing it on behalf of their investors or safeguarding it for their crypto exchange customers. Sam Bankman-Fried, CEO of FTX, lived in a 12,000 square foot, five-bedroom luxury penthouse overlooking the Atlantic Ocean in a prestigious resort in the Bahamas, which was put up for sale for $39.5 million the same day FTX filed for bankruptcy, according to reporting at the U.K. news outlet, The Guardian. The Block reports that an FTX-related entity called FTX Property Holdings “spent $74,230,193 on property in the Bahamas over 2022. The bulk of that money, $67,440,193.99, went to entities surrounding Albany Bahamas, a luxury condo resort in New Providence.” According to data at the Federal Election Commission, Bankman-Fried … Continue reading →