Search Results for: Federal Reserve

By Pam Martens and Russ Martens: October 21, 2020 ~ Turns out the federal government’s plan for dealing with a mega bank failure on Wall Street is no better conceived than the federal government’s plan for dealing with the worst pandemic since 1918. The Federal Reserve issued two press releases yesterday about “large banks.” One read: “Agencies finalize rule to reduce the impact of large bank failures.” The other read: “Agencies issue final rule to strengthen resilience of large banks.” Wait. What? Fed Chairman Jerome Powell has been telling anyone who would listen this year – from Congress to viewers of the Today show – that the large banks have been a “source of strength” during the worst economic downturn since the Great Depression. If that were true (which we’ve questioned from the first time Powell said it) why is the Fed now worrying about a “large bank failure” and … Continue reading →

By Pam Martens and Russ Martens: October 19, 2020 ~ On May 2, 1985 the highest law enforcement officer in the United States, the head of the U.S. Department of Justice, Attorney General Edwin Meese, held a news conference to announce that the sixth largest brokerage firm on Wall Street, E.F. Hutton, was pleading guilty to 2,000 felony counts of wire and mail fraud. It had also agreed to pay criminal fines of $2 million and up to $8 million in restitution to the 400 banks it had defrauded. The fraud had lasted less than two years, from July 1, 1980 and February 28, 1982, and consisted of the following according to the Justice Department: “The essence of the charges was that Hutton obtained the interest-free use of millions of dollars by intentionally writing checks in excess of the funds it had on deposit in various banks.” On the following … Continue reading →

By Pam Martens and Russ Martens: October 15, 2020 ~  The United States is experiencing the worst pandemic since 1918. The U.S. economy is experiencing the worst economic crisis since the Great Depression of the 1930s. And the general public is attempting to vote in the most important presidential election of a lifetime with obstacles like fake ballot boxes, 5-hour wait lines, and destroyed mail-sorting machines. What is the central bank of the United States, the Federal Reserve, doing with its free time at this critical moment? It’s rewriting its rules for responding to Freedom of Information Act (FOIA) requests from the public and media. After revising the Fed’s own FOIA rules earlier this year, the Fed is now rewriting the FOIA rules for the Federal Open Market Committee (FOMC). That just happens to be the entity in charge of sluicing that cumulative $9 trillion to trading houses on Wall … Continue reading →

By Pam Martens and Russ Martens: October 13, 2020 ~ It has been the contention of Wall Street On Parade for more than a decade that today’s so-called “universal banks,” also variously known as megabanks or Global Systemically Important Banks (G-SIBs), are a banking model from hell that was thoroughly discredited in the tens of thousands of transcripts and documents released by the U.S. Senate following its multi-year investigation of that structure in the early 1930s. Now the seminal book proving that theory has just been published. Written by Arthur E. Wilmarth, Jr. and titled Taming the Megabanks: Why We Need a New Glass-Steagall Act, the book brilliantly takes the reader through a riveting guided tour covering the past century and the resurrection of this same disastrous U.S. banking model in 1999. Oxford University Press is the publisher of Wilmarth’s book. We can envision it becoming one of the most … Continue reading →

By Pam Martens and Russ Martens: October 8, 2020 ~ Federal regulators are rapidly becoming bigger Dark Pools of information than those secretive stock exchanges run by the big banks on Wall Street. On Tuesday, September 29, when all eyes were focused on the presidential debate to occur that evening, the Justice Department issued a press release announcing the fourth and fifth felony counts against JPMorgan Chase in the past six years. In an unprecedented move, the Justice Department did not hold a press conference to explain why the country’s largest bank is allowed to perpetually commit felonies with no change in management. The bank admitted to the charges and was put on a three-year probation – its third such probation in six years. Jamie Dimon, the Chairman and CEO of the bank, who has presided over all five felony counts, was left in place at the bank. Yesterday, when … Continue reading →

By Pam Martens and Russ Martens: October 6, 2020 ~ When both parties in Congress came together in March to pass the CARES Act, which was signed into law by President Trump on March 27, the clear intention of the legislation was for the U.S. Treasury to hand over $454 billion of taxpayers’ money to the Federal Reserve. The Fed, in turn, was to leverage the money by 10 times to approximately $4.54 trillion to deploy to keep the economy moving, credit flowing, workers employed and businesses alive until the pandemic had been brought under control. Fed Chairman Jerome Powell made an unprecedented appearance on the Today show on March 26 and explained the plan like this: “In certain circumstances like the present, we do have the ability to essentially use our emergency lending authorities and the only limit on that will be how much backstop we get from the Treasury Department. … Continue reading →

By Pam Martens and Russ Martens: October 1, 2020 ~ The New York Fed, the unlimited money spigot in times of need by Wall Street’s trading houses, has been conducting meetings with hedge funds to get their input on the markets. More on that in a moment, but first some necessary background. Millions of Americans have seen the movie The Big Short, based on the Michael Lewis bestselling book by the same name. A key character in the movie is Mark Baum, played by Steve Carell. The character is based on Steve Eisman, who, during the financial crisis of 2008, was employed at FrontPoint Partners LLC, a hedge fund unit of Morgan Stanley. As widely acknowledged, FrontPoint was shorting subprime residential mortgages that were packaged into CDOs (Collateralized Debt Obligations). Shorting means to make a bet that a financial instrument will lose value. FrontPoint was, in fact, hoping American homeowners … Continue reading →

By Pam Martens and Russ Martens: September 30, 2020 ~ Conjuring up another era of “irrational exuberance,” data from Wall Street’s self-regulator, FINRA, shows that margin debt has grown by 15 percent since the end of January to a total of $645.5 billion as of August 31 of this year. That’s very close to the prior record of $668.9 billion set at the end of May 2018, according to the FINRA database. Margin debt is created when investors borrow money against their stocks (or other marginable securities) held in a margin account at a brokerage firm. Typically, the margin loan is to enable the customer to buy more stock on a leveraged basis. Under the Federal Reserve’s Regulation T, investors may borrow a maximum of 50 percent of the purchase price of stocks from their brokerage firm. The remaining 50 percent of the price of the securities must be funded … Continue reading →

By Pam Martens and Russ Martens: September 24, 2020 ~ Federal Reserve Chairman Jerome Powell’s oft repeated mantra this year – that the behemoth Wall Street banks “are a source of strength” in this economic crisis – is melting away faster than a snow cone in July, along with the share prices of these banks. So whom should Americans believe: The composite wisdom of the market or the opinion of a federal regulator whose supervision of these banks has been far from stellar. The market would seem to have spoken clearly on just how “strong” these banks are. Since the first trading day of the year, January 2,  to yesterday’s closing price, here’s the factual reality of just how much common equity capital these banks have bled: Citigroup is down a stunning 48 percent, losing almost half of its common equity capital; Bank of America has lost 35 percent; while … Continue reading →

By Pam Martens and Russ Martens: September 22, 2020 ~ There are two opposing narratives living side by side in the United States: independent journalists and researchers have documented how the behemoth banks on Wall Street are as crooked as ever while the Federal Reserve Chairman, Jerome Powell, repeatedly tells Congress and the press that these banks are a “source of strength” in this economic crisis. (Never mind that the Fed is flooding these banks with trillions of dollars in cumulative loans at less than 1 percent interest.) Corporate-owned mainstream media, that is dependent on financing from these same banks, prefers the Fed’s alternative version of reality. Wall Street On Parade has repeatedly written about critical reports showing serial corruption at these banks that have been censored by those Pulitzer prize winning media outlets. Yesterday provided another example: the New York Times refused to cover the International Consortium of Investigative … Continue reading →