Search Results for: Federal Reserve

By Pam Martens and Russ Martens: January 18, 2021 ~ At 10 a.m. tomorrow morning, one day ahead of President-Elect Joe Biden’s inauguration, the Senate Finance Committee will hold the confirmation hearing for Janet Yellen to become the next U.S. Treasury Secretary. In that role, Yellen sits atop a sprawling federal agency that includes the IRS; the Office of the Comptroller of the Currency, which regulates national banks and reports on their hundreds of trillions of dollars in derivatives; the Bureau of Engraving and Printing; the U.S. Mint; the Financial Crimes Enforcement Network (FinCEN) which is tasked with combating money laundering but has failed miserably in the job; and numerous other units. In addition, legislation passed by Congress puts Yellen in charge of the slush fund known as the Exchange Stabilization Fund; makes her the Chair of the Financial Stability Oversight Council, and, thanks to stealthy legislation passed during the … Continue reading →

By Pam Martens: January 15, 2021 ~ I sat behind a trading terminal at two Wall Street firms from 1986 to 2006. I can assure you that if the President of the United States was refusing to accept the outcome of a presidential election and urging a coup d’é·tat by his civilian militia, the stock market would have sold off by double digits. This era’s stock market has yawned at the spectacle. I can further assure you that if an actual, violent coup d’état did occur inside the halls of Congress and played out in real time on every television network and cable news program in the country and around the world, there would have been a crash in the stock market. (I was sitting behind my trading terminal on October 19, 1987 when the Dow Jones Industrial Average crashed 22 percent by the end of the trading day and … Continue reading →

By Pam Martens and Russ Martens: January 6, 2021 ~ On December 29 we needed a clarification from former Treasury Secretary Larry Summers about his opinion column against Congress issuing $2,000 stimulus checks. We sent him an email at 10:13 a.m. and received a very clear response from him directly at 12:51 p.m. that day — a span of a few hours. Compare that timely response to Janet Yellen’s respect for the media’s obligation to report a full set of facts to the American people. Three days ago, we contacted Yellen at four different entities with which she is affiliated. Only the Brookings Institution responded, saying she was on leave. President-elect Joe Biden’s media team did not respond at all, nor did the Washington Speakers Bureau and University of California, Berkeley. Yellen is Biden’s nominee for U.S. Treasury Secretary. In anticipation of her Senate confirmation hearing, she has released her … Continue reading →

By Pam Martens and Russ Martens: January 4, 2021 ~ Following the stock market crash in 1929, more than 9,000 banks in the United States failed over the next four years. In just the one year of 1933, more than 4,000 banks closed their doors permanently as a result of insolvency. The 1930s banking crisis came to a head on March 6, 1933, just one day after President Franklin D. Roosevelt was inaugurated. Following a month-long run on the banks, Roosevelt declared a nationwide banking holiday that closed all banks in the United States. On March 9, 1933 Congress passed the Emergency Banking Act which allowed regulators to evaluate each bank before it was permitted to reopen. Thousands of banks were deemed insolvent and permanently closed. It is estimated by the Federal Deposit Insurance Corporation (FDIC) that depositors lost $1.3 billion to failed banks in that era. That would be … Continue reading →

By Pam Martens and Russ Martens: December 30, 2020 ~ The question of just how much fiscal stimulus and COVID-19 relief payments are needed right now in order to prevent the U.S. economy from going off a cliff requires a recognition of what we do not know about the actual fragility of the U.S. economy over the next 12 months and the current fragility of the financial system of the United States. We start from the factual premise that the current financial crisis did not originate as a result of the pandemic. The plumbing of the financial system broke on September 17, 2019, months before the first COVID-19 case was discovered anywhere in the world. We know this because this is the date that the Federal Reserve announced it would begin acting as lender of last resort to the repo loan market on Wall Street. (Repos are a form of … Continue reading →

By Pam Martens and Russ Martens: December 29, 2020 ~ As Senator Bernie Sanders advocates for $2,000 pandemic relief checks for struggling Americans, Larry Summers is challenging the premise of $2,000 checks using ginned-up statistics that were dubiously published by Bloomberg News on Sunday. Larry Summers stepped into Robert Rubin’s post as Treasury Secretary under President Bill Clinton after Rubin left to make $15 million a year serving on Citigroup’s board. Citigroup was the Frankenbank that both Summers and Rubin made possible by advocating for the repeal of the Glass-Steagall Act. That seminal piece of legislation from 1933 had successfully banned the combination of deposit-taking banks with Wall Street’s casino trading houses for 66 years until these two men and their ilk got Clinton to sign its repeal in 1999. At the November 12, 1999 signing ceremony for the Gramm-Leach-Bliley Act, the legislation that repealed the Glass-Steagall Act, Summers said … Continue reading →

By Pam Martens and Russ Martens: December 24, 2020 ~ Merry Christmas Eve 2020 and welcome to a rerun of the roaring 20s, complete with one-termer President Herbert Hoover in the White House, Wall Street running wild with unchecked corruption, and unprecedented income inequality. On Saturday, Bloomberg News attempted to outline the key components of markets gone bonkers “in this year of death, disease and economic calamity,” writing that the “Mania is laid bare in IPO surge, options boom and crypto fever.” In fairness, the nine reporters who worked on the story, none of whom received a byline but are noted at the bottom of the article, correctly compiled the observable earmarks of this bubble market. But they failed to dig into the dark underbelly of how we got here. Let’s start with the compromised Wall Street regulators in Washington. The Chair of the Securities and Exchange Commission, Jay Clayton, … Continue reading →

By Pam Martens and Russ Martens: December 22, 2020 ~ The language that Republican Senator Pat Toomey inserted into the final stimulus bill (Consolidated Appropriations Act, 2021) appears below. It not only restricts the Federal Reserve’s ability to extend some of its current emergency lending programs that help small and medium size businesses and state and local governments beyond December 31 of this year (while leaving Wall Street bailout programs alive for at least another 90 days) but it also enshrines the autonomy of the U.S. Treasury Secretary to operate a massive slush fund – the Exchange Stabilization Fund (ESF). Most Americans have never heard of the Treasury’s Exchange Stabilization Fund. It was created in 1934 to provide support to the U.S. dollar during the Great Depression. The ESF has grown from $94.3 billion in assets prior to Trump taking office to a balance of $681 billion as of October 31, 2020. As recently … Continue reading →

By Pam Martens and Russ Martens: December 21, 2020 ~ On November 27, Wall Street On Parade reported that U.S. Treasury Secretary Steve Mnuchin had failed to turn over to the Federal Reserve 75 percent of the $454 billion that Congress had earmarked in the CARES Act for the Fed’s emergency lending programs. We wrote at the time: “…for months now, the Federal Reserve’s weekly financial statements known as the H.4.1 have indicated that all the Fed received from Treasury for its emergency lending facilities was $114 billion, leaving $340 billion unaccounted for.” We also took the time to send an email to the Federal Reserve’s press office to confirm that the Fed had received only the $114 billion from the Treasury for its emergency lending programs. They directed us to Fed public documents confirming this. Now the Congressional Research Service (CRS), a century old nonpartisan agency that provides legal … Continue reading →

By Pam Martens and Russ Martens: December 17, 2020 ~ There was a jaw-dropping exchange between Politico reporter Victoria Guida and Fed Chair Jerome Powell at his press conference yesterday following the two-day meeting of the Fed’s Federal Open Market Committee (FOMC). Powell first acknowledged in his opening statement that “the current economic downturn is the most severe of our lifetimes.” But he then proceeds to tell Guida that the Fed has given no thought at all to what kind of emergency lending it might engage in under the incoming Biden administration. Treasury Secretary Steve Mnuchin has kneecapped the Fed’s existing emergency loan facilities by demanding that the Fed return the Treasury’s unused money that is backstopping these facilities as loss-absorbing capital. The Fed has for years attempted to reassure markets that there will be no surprises from the Fed; that it will be providing lots of forward guidance to … Continue reading →