Search Results for: Federal Reserve

By Pam Martens and Russ Martens: May 7, 2021 ~ Remember the phrase “putting lipstick on a pig.” It became popular after the dot.com bust when it was learned that the big Wall Street banks had glowingly recommended “hot” new issues of stocks to their customers while secretly calling them “crap” and “dogs” in internal emails. Putting lipstick on a pig is what the Federal Reserve is attempting to do in the Financial Stability Report it released yesterday afternoon. Both the lipstick and the pig are captured in this paragraph on page 8 of the Fed’s report: “Banks remain well capitalized, and leverage at broker-dealers is low. Measures of hedge fund leverage are somewhat above their historical averages, but the data available may not capture important risks from hedge funds or other leveraged funds.” To unpack the scope of the Fed’s deception in this paragraph, one needs to first understand that … Continue reading →

By Pam Martens and Russ Martens: May 6, 2021 ~ The House Financial Services Committee will hold its third hearing today at noon on the GameStop and other meme stock trading fiascos of January. It will be the first time that the newly sworn in Chair of the SEC, Gary Gensler, gives testimony to Congress. Thus, the written statement that Gensler provided to the Committee has been eagerly awaited by the denizens (and charlatans) of Wall Street for insight into his plans for reining in market abuses and regulatory dodges. While Gensler was just as ambiguous on most fronts in his statement for today’s hearing as he was in his testimony at his confirmation hearing, he did provide a strong hint that he may use the SEC’s authority to force the mega banks to accurately report the beneficial owners of stocks held under tricked-up derivative contracts. The public learned from the … Continue reading →

By Pam Martens and Russ Martens: May 5, 2021 ~ The House Financial Services Committee has released its official Memorandum outlining the general topics it wants to cover in tomorrow’s hearing on the wild trading action in GameStop and other meme stocks in January that has raised serious questions about U.S. market integrity. The implosion of the Archegos Capital Management family office hedge fund in March, which has generated losses of more than $10 billion thus far at global systemically important banks, will likely be a key topic when the Senate Banking and House Financial Services Committees haul Wall Street bank CEOs to hearings on May 26 and 27, respectively. An insightful paragraph in the Memorandum for the House hearing tomorrow reads as follows: “Testimony given at the first two GameStop hearings raised concerns about the market dominance of some capital market participants, as well as correlated risks arising from the … Continue reading →

By Pam Martens and Russ Martens: April 26, 2021 ~ On Wednesday, March 11, 2020, the World Health Organization declared COVID-19 to be a pandemic. From that point on, through March 23, the share price performance of the Standard & Poor’s 500 began to diverge dramatically from the share price performance of the mega banks on Wall Street. (See chart above.) From the start of the year in 2020, the S&P 500 fell a little more than 30 percent through March 23 while Bank of America, Morgan Stanley, Goldman Sachs, and JPMorgan Chase were down from 40 to 50 percent. Citigroup was down by a stunning 56 percent. (Citigroup had closed at $79.89 on December 31, 2019. By the close of trading on March 23, 2020, it was a $35.39 stock.) We compared these bank stocks to the S&P 500 because the companies that make up the S&P 500 index are … Continue reading →

By Pam Martens and Russ Martens: April 23, 2021 ~ According to the most recent 13F filings made with the Securities and Exchange Commission, the biggest banks on Wall Street are each sitting on hundreds of billions of dollars of stock positions – which we are now learning include highly leveraged stock positions for hedge funds called family offices. The purpose of the SEC’s 13F filing is to provide transparency to the public as to the beneficial owners of publicly-traded stocks. Institutions holding more than $100 million in assets are supposed to file the 13F. But as the public learned to its horror over the past month, a reckless family office hedge fund called Archegos Capital Management built up stock positions estimated at $100 billion by borrowing about $90 billion of that from a handful of the largest Wall Street banks. Archegos had been in operation since 2013, but had never … Continue reading →

By Pam Martens and Russ Martens: April 22, 2021 ~ The headline above was Point Number 6 in a multi-point Tweet offered by Grant’s Interest Rate Observer on November 18 of last year on how the Fed has grossly distorted markets. The 4,000-year claim is derived from the seminal book on interest rates, Sidney Homer’s A History of Interest Rates, Fourth Edition, co-authored by Richard Sylla. One of our readers recently sent us a link to a fascinating interview with James Grant, the Founder and Editor of Grant’s Interest Rate Observer. The interview was conducted in February by Consuelo Mack for the PBS program, WealthTrack. We listened carefully to the interview and were delighted to see that over the more than three decades that Grant has been chronicling the Fed’s thumb on the scale, the powerful forces on Wall Street have failed to compromise his voice. If anything, Grant has become … Continue reading →

By Pam Martens and Russ Martens: April 19, 2021 ~ We’ve been closely monitoring the Senate Banking and House Financial Services Committees for the past 15 years. We can think of no other time when the Committees issued a joint statement to announce they were hauling the most powerful men on Wall Street to testify, without offering a scintilla of information on the topic of the hearing. The press statement simply indicated that the Senate Banking Committee would hold its hearing on Wednesday, May 26 at 10 a.m. and the House Financial Services Committee would hold its hearing the following day on Thursday, May 27 at 12 noon. The announcement indicated that the following CEOs are scheduled to testify: Jamie Dimon of JPMorgan Chase; David Solomon of Goldman Sachs; Jane Fraser of Citigroup; James Gorman of Morgan Stanley; Brian Moynihan of Bank of America; and Charles Scharf of Wells Fargo. The … Continue reading →

By Pam Martens and Russ Martens: April 13, 2021 ~ When Jerome Powell, the Chairman of the Federal Reserve, appeared for an interview this past Sunday night on the CBS investigative program, 60 Minutes, he asserted complete ignorance of the amount of margin debt currently being used to inflate the stock market to one new historic high after another. The exchange between Powell and 60 Minutes host, Scott Pelley, went as follows: Pelley: “The securities industry has reported that $814 billion has been borrowed by people investing in the stock market, borrowed against their portfolios. That’s a 49 percent increase over last year. “And the last time it grew that much was in 2007, before the Great Recession. And the time it grew that much before that was 1999, just before the dot com implosion. At what point does the Federal Reserve start to rein in this speculative bidding up of … Continue reading →

By Pam Martens and Russ Martens: April 12, 2021 ~ The CBS “investigative” program, 60 Minutes, gave Wall Street a pass again last night. This time around 60 Minutes’ host Scott Pelley interviewed Federal Reserve Chairman Jerome Powell. The Fed, and by extension, Powell, are in charge of supervising the holding companies of the mega banks on Wall Street, including those involved just two weeks ago in loaning out their balance sheets to the tune of tens of billions of dollars to a hedge fund run by a man previously charged with insider trading and stock price manipulations. The man is Sung Kook (Bill) Hwang and the hedge fund is Archegos Capital Management. (Fed-supervised mega banks loaning out their balance sheets to hedge funds for nefarious purposes was previously exposed in 2014 in an in-depth report and hearing by the U.S. Senate’s Permanent Subcommittee on Investigations. The practice has clearly metastasized … Continue reading →

By Pam Martens and Russ Martens: April 9, 2021 ~ Yesterday, Senator Sherrod Brown, the Chair of the Senate Banking Committee, released the content of letters he had sent to Goldman Sachs, Morgan Stanley, Credit Suisse and Nomura regarding their interactions with Archegos Capital Management. Archegos is the hedge fund styled as a “family office,” that is making headlines around the world for blowing itself up within a week’s time while inflicting billions of dollars of losses on what are supposed to be heavily supervised global banks. The letters to Goldman Sachs, Morgan Stanley and Nomura were addressed to their CEOs while the letter to Credit Suisse went to its General Counsel. All four of the letters contained the same ten questions, with only minor variations. Questions five, six and seven of Brown’s letter open some very thorny subjects that could have serious legal ramifications for the banks involved. Question five … Continue reading →