Search Results for: Federal Reserve

By Pam Martens and Russ Martens: March 3, 2021 ~ The new, 34-year old Democratic Senator from Georgia, Jon Ossoff, let a very big cat out of the bag at yesterday’s Senate Banking hearing. For at least a year, from September 17, 2019 through at least September 30, 2020, the New York Fed, acting as an agent for the Federal Reserve, doled out a cumulative $9 trillion or more in repo loans. The Fed would say only that the money was going to some of its 24 Primary Dealers on Wall Street, without naming any specific bank receiving the money. In June of 2020, the New York Fed abruptly stopped reporting the dollar amounts it was pumping out each day. (See Watchdog Report: Fed’s Billions in Emergency Repo Loans to Wall Street Didn’t Go Away in June; They Just Went Dark.) The emergency repo loans by the Fed began months before there … Continue reading →

By Pam Martens and Russ Martens: March 1, 2021 ~ Beginning on September 17, 2019 – months before there was any report of a COVID-19 case anywhere in the world – the Federal Reserve turned on its money spigot to the trading houses on Wall Street. By October 23, 2019 the Fed announced that it was upping these loans to $690 billion a week – again, months before any report of COVID-19 anywhere in the world. Earlier in October 2019, the Fed had also announced that it would be buying back $60 billion a month in Treasury bills. Within a span of six months, the Fed had pumped out a cumulative $9 trillion in loans to Wall Street’s trading houses, according to its own spread sheets, with no peep as to which Wall Street firms were getting the bulk of that money. It’s more than a year later and the … Continue reading →

By Pam Martens and Russ Martens: February 26, 2021 ~ The action in the U.S. Treasury market yesterday reminded us of the classic “I Love Lucy” episode at the chocolate factory. As the conveyor belt churns out chocolate balls faster than Lucy and Ethel can handle them, they resort to stuffing them in their mouths, their hats, and their shirts. Lucy remarks: “I think we’re fighting a losing game.” (See video clip below.) That was the scene in the Treasury market yesterday – too much supply and no where to stuff it, causing a sharp spike in yields which set off a stock market selloff that left the Dow down 559.8 points or 1.75 percent on the day, while the tech-heavy Nasdaq fared far worse, losing 478.5 points or 3.52 percent. That the Treasury market is now projectile vomiting T-notes should come as a surprise to no one. As the … Continue reading →

By Pam Martens and Russ Martens: February 24, 2021 ~ Every Thursday, at approximately 4:30 p.m., the Federal Reserve provides a report on its balance sheet as of the prior day. It’s known as the H.4.1 report or the Wednesday Level report. On Thursday, September 4, 2008, the Fed’s H.4.1 report showed a $935 billion balance sheet as of Wednesday, September 3, 2008. That was 12 days before iconic financial institutions on Wall Street began to blow up in what became the worst financial crisis since the Great Depression. As of last Wednesday, February 17, 2021, the Fed’s balance sheet stood at $7.6 trillion – an increase of 712.83 percent in less than 13 years. The Federal Reserve was created in 1913 and such a staggering growth in its balance sheet has not occurred at any other period in U.S. history — not during the Great Depression, not even during … Continue reading →

By Pam Martens and Russ Martens: February 16, 2021 ~  Rewarding bad behavior with obscene pay is the sine qua non of Wall Street. Thus it’s a remarkable event to see a CEO of a mega Wall Street bank get punished with a 21 percent pay cut.  Michael Corbat is slated to retire this month as Citigroup’s CEO and be replaced by Jane Fraser, the first woman CEO of any major Wall Street bank. (The news would be more welcome if the areas that Fraser previously supervised at the bank did not have all those fines and sanctions.) The Board delivered an unusual kick in the pants to Corbat on his way out the door. It cut his compensation for 2020 by $5 million from what he had been awarded for 2019. Corbat’s total compensation went from $24 million in 2019 to $19 million for 2020. The announcement was made in … Continue reading →

By Pam Martens and Russ Martens: February 15, 2021 ~ The tentacles of Ken Griffin’s Citadel octopus were involved in multiple ways in the GameStop saga that will get a hearing this Thursday before the House Financial Services Committee. Griffin has been called to testify along with others. GameStop is the brick-and-mortar video game retailer whose stock soared from $18.84 on December 31 of last year to an intraday high of $483 on January 28 – a breathtaking run of 2,465 percent in four weeks – before plunging back to earth. It closed on Friday at $52.40. The hearing has been called to understand the relationship between all of the parties that played a pivotal role in the wild trading activity, which made fortunes for some big players while leaving others licking their wounds from what has the appearance of a pump and dump scheme. Griffin’s Citadel Securities was paying … Continue reading →

By Pam Martens and Russ Martens: February 10, 2021 ~ Remember all the hubbub in the fall of last year when then U.S. Treasury Secretary Steve Mnuchin demanded in a November 19 letter that the Fed return all of the money from the CARES Act that it had not used for emergency lending programs. Mnuchin’s stated reason for the demand was because he was going to turn the unused funds over to the general fund of the Treasury so that Congress could reappropriate it for other purposes. At the time, Mnuchin made it sound like the Fed had been sitting on the bulk of the $454 billion that the CARES Act had allotted to be used as loss-absorbing capital for the Fed’s emergency lending programs. In reality, Mnuchin had never turned over the bulk of the CARES Act money to the Fed, but had parked it instead in a Treasury … Continue reading →

By Pam Martens and Russ Martens: February 4, 2021 ~ Since 2000, the Securities and Exchange Commission has required brokerage firms to file a quarterly report showing where they are routing their stock trades for execution. The filing is known as a 606 report after Rule 606 of Regulation NMS (National Market System). Because so many traders at Reddit’s WallStreetBets’ message board have focused on the fact that billionaire Ken Griffin’s Citadel Securities was executing the majority of trades for Robinhood, the trading app where a lot of the Redditors directed their GameStop trades, we decided to take a look at what other online brokers might have also been directing GameStop trades to Citadel Securities. According to the 606 reports for the fourth quarter of 2020 for the following nine online brokers, Citadel was providing payment-for-order-flow (giving a cash rebate for trade orders directed to it) to each of the … Continue reading →

By Pam Martens and Russ Martens: January 26, 2021 ~ The chart above reminded us of what happened in the London Whale saga at JPMorgan Chase. The London derivatives traders at JPMorgan Chase were making such huge bets in a specific credit index that they effectively became the market with no escape route to unwind their losing trades. The bank had, insanely, used customer deposits to make those wild bets and ended up losing at least $6.2 billion. Since August 6 of last year, the Fed has purchased $400 billion of U.S. Treasury notes and bonds. Despite that massive amount of propping up the market, the yield on the 10-year Treasury has more than doubled, from half of one percent to a yield of 1.05 percent at 7:30 a.m. this morning. That means that all of those billions of dollars in Treasuries that the Fed bought at lower yields are … Continue reading →

By Pam Martens and Russ Martens: January 24, 2021 ~  Haven’t we learned anything about properly vetting people for the highest offices in the U.S. government? Former Fed Chair and Treasury Secretary nominee Janet Yellen has failed to report the details of millions of dollars in fees that she earned in 2018, the year she stepped down as Fed Chair, as she went on a whirlwind of speaking engagements in foreign cities around the world. Yellen’s “leadership” role with the Bloomberg New Economy Forums which had the “active participation and support” of an organization openly tied to the Chinese Communist Party, raises further serious red flags. And yet, Yellen sailed through her Senate Finance Committee confirmation hearing this past week, gaining a favorable vote of 26-0. A full Senate vote to confirm Yellen as Treasury Secretary is expected to occur tomorrow. What Yellen did disclose on her Office of Government … Continue reading →