Search Results for: Federal Reserve

By Pam Martens and Russ Martens: July 2, 2020 ~ The first thing you need to know about Citibank and its parent, Citigroup, is that they have an extensive rap sheet. (See here). The second thing you need to know is that Citigroup is a serial predator that perpetually promises its regulators that it’s going to reform, but never does. The third thing you need to know is that Citigroup has made a sap out of the Federal Reserve – not once, but twice. During the last financial crisis of 2007 to 2010, Citigroup somehow induced the Fed to secretly give it $2.5 trillion cumulatively in below-market rate loans for 2-1/2 years to prop up its sinking carcass. Citi got the cheap loans (often at below one-half of one percent) and then went right on charging its struggling credit card customers high double-digit interest rates. Citi played a major role … Continue reading →

By Pam Martens and Russ Martens: July 1, 2020 ~ Fed Chairman Jerome Powell and Treasury Secretary Steve Mnuchin apparently fear unleashing more angry protesters across the country screaming “no justice, no peace” into an air increasingly filled with COVID-19 droplets, more than they fear Trump Tweeting reprisals against them in the wee hours of the morning. Both Powell and Mnuchin raised their hands yesterday during the House Financial Services Committee hearing to agree to work with a proposed Department of Reconciliation to deal with the country’s history of slavery, segregation and ongoing “invidious discrimination” of people of color. The hearing had been called by the Chair of the Committee, Maxine Waters, to take testimony on “Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response.” That topic was frequently framed around questions of racial discrimination and inequality. The raised hands from Powell and Mnuchin came in response to questioning … Continue reading →

By Pam Martens and Russ Martens: June 29, 2020 ~ Tomorrow, June 30, the House Financial Services Committee will hold a hearing beginning at 12:30 p.m. titled “Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response.” Fed Chair Jerome Powell and Treasury Secretary Steve Mnuchin are scheduled as witnesses. A good number of Democrats on this Committee – such as Maxine Waters (the Chair), Katie Porter, Bill Foster, Brad Sherman, Carolyn Maloney, Madeleine Dean, Sylvia Garcia, and Ayanna Pressley – have no problem fashioning probing questions that benefit the American people’s right to know if government is showing proper stewardship of the people’s money. But Republicans can’t seem to craft a meaningful question, opting instead to simply heap praise on Powell and Mnuchin for the bailout and simultaneous deregulation of Wall Street. Wall Street On Parade is nothing if not charitable. We want to help out the Republicans on … Continue reading →

By Pam Martens and Russ Martens: June 28, 2020 ~ Taxpayers’ money under the CARES Act is going up in smoke — literally. As of today, there are more than 32,000 people in the United States hospitalized with COVID-19, with thousands struggling to breathe from a virus that attacks the respiratory system as well as other parts of the body. So what has the Federal Reserve decided to do to help out during this national health crisis? It’s propping up the prices of the bonds issued by fossil fuel corporations and Big Tobacco – two serial polluters of the air we breathe. The Fed decided to release its first list of individual corporate bond purchases in its Secondary Market Corporate Credit Facility today – on Sunday – when folks are out taking a walk with face masks in an effort to avoid dangerous particles in the air. The same Fed … Continue reading →

By Pam Martens and Russ Martens: June 26, 2020 ~ Yesterday the Federal Reserve released its highly awaited stress tests on the biggest and most dangerous banks in America. The stress test results fill an 83-page document with dozens of charts showing what would happen to the banks under a hypothetical “severely adverse scenario.” This scenario, unfortunately, was previously prepared and pales in comparison to the actual economic damage rendered by the COVID-19 pandemic. For example, the severely adverse scenario for this year’s stress tests imagined the U.S. unemployment rate climbing to a peak of 10 percent in the third quarter of 2021. The unemployment rate is currently 13.3 percent. But far more frightening, the Fed’s severely adverse scenario for GDP imagined a decline of “8½ percent from its pre-recession peak, reaching a trough in the third quarter of 2021.” As of yesterday, June 25, the Atlanta Fed’s GDPNow estimate … Continue reading →

By Pam Martens and Russ Martens: June 25, 2020 ~ The Federal Reserve will release the results of its stress tests on the biggest and most dangerous banks at 4:30 p.m. today. But the potential results of those tests played a negative role in the stock market’s performance yesterday. The Dow’s drop of 710 points yesterday can be ascribed to two things: the alarming news reports that COVID-19 cases are skyrocketing in the second and third most populous states in the U.S. – Texas and Florida; and a bombshell report from Bloomberg News released at 7:00 a.m. yesterday morning. The Bloomberg article, by Lisa Lee and Shahien Nasiripour, cast the Federal Reserve in an unfavorable light over its failure to halt dividend payments at the biggest Wall Street banks, something that European bank regulators have done during the pandemic crisis. Eight of the largest U.S. banks announced in unison on Sunday, … Continue reading →

By Pam Martens and Russ Martens: June 22, 2020 ~ President Donald Trump has been sacking federal watchdogs at the speed of a bullet train. In just a six-week period in April and May, the President fired five Inspectors General of federal agencies. In last Friday night’s coup d’état, Attorney General William Barr, acting as consigliere for the President, ousted the U.S. Attorney for the Southern District of New York, the federal prosecutor that oversees prosecutions of Wall Street banks in that district. The privately owned Federal Reserve Bank of New York, which is in charge of the bulk of the Fed’s bailout programs, also resides in that district. Barr and the President want to put a man with zero experience as a prosecutor in charge of that office, Jay Clayton, who currently heads the Securities and Exchange Commission which has only civil enforcement powers. Clayton represented 8 of the … Continue reading →

By Pam Martens and Russ Martens: June 18, 2020 ~ As corporate-friendly Republican members of the Senate Banking Committee and House Financial Services Committee engaged in effusive praise at hearings this week over the efforts of Fed Chairman Jerome Powell to quickly establish a plethora of corporate bailout facilities, the voices of Wall Street veterans have struck a different chord. These long-term market watchers are warning that the Fed has created an unprecedented stock market bubble that is destined to end badly. Earlier this week, CNBC anchor Melissa Lee interviewed Sven Henrich, the Lead Market Strategist at Northman Trader. Henrich savaged the Fed’s recent interventions in the market, stating the following: “The Fed really has created a massive asset bubble here in the last few months. The lender of last resort has become the lender of the entire resort. And no red line shall remain uncrossed. “The Fed has basically … Continue reading →

By Pam Martens and Russ Martens: June 18, 2020 ~ There is fresh evidence that Citigroup, the mega Wall Street bank that was insolvent but still illegally propped up by the Fed during the last financial crisis (to the tune of $2.5 trillion cumulatively in secret loans for two and one-half years) is back to drinking at the Fed’s trough. The Fed has set up a program called the Paycheck Protection Program Liquidity Facility (PPPLF). That Fed program is reimbursing small banks for the small business loans that they made under the Paycheck Protection Program which was established by Congress in the CARES Act and being overseen by the Small Business Administration (SBA). According to the Fed, the idea is to reimburse these banks around the country for the PPP loans so that they can make fresh loans to other struggling consumers and businesses. The banks simply post the PPP … Continue reading →

By Pam Martens and Russ Martens: June 17, 2020 ~ The Paycheck Protection Program (PPP) was authorized by Congress under the CARES Act and is being overseen by the Small Business Administration (SBA). The goal of the PPP program is to make 1 percent interest loans to small businesses experiencing hardship from the coronavirus crisis and then forgive the loans if the businesses keep their employees on the payroll. Even though the loans are guaranteed against losses by the SBA, the Federal Reserve launched its own program, called the Paycheck Protection Program Liquidity Facility, to reimburse lenders who make these loans. So far, the Fed has reimbursed $57 billion of these loans as of June 10, out of total loans approved by the SBA of more than $500 billion. The odd thing about those Fed reimbursements is that a stunning $5.3 billion in reimbursements, or 9 percent of the $57 … Continue reading →