Search Results for: Federal Reserve

By Pam Martens and Russ Martens: May 13, 2020 ~ The stimulus bill known as the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) was signed into law by President Donald Trump on March 27. Among its many features (such as direct checks to struggling Americans and enhancing unemployment compensation by $600 per week for four months to unemployed workers so they could pay their rent and buy food) the bill also carved out a dubious $454 billion (or 25 percent of the total $1.8 trillion spending package) for the U.S. Treasury to hand over to the Federal Reserve. This was the Faustian Bargain the Democrats had to agree to in order to get the deal approved by the Wall Street cronies in the Senate. If you subtract the $454 billion from the $1.8 trillion total spending package, that left $1.346 trillion for other purposes. But the $454 billion … Continue reading →

By Pam Martens and Russ Martens: May 12, 2020 ~ It’s off to the races today for BlackRock. The New York Fed, with authority from the Federal Reserve Board and backstopped with taxpayers’ money, will begin the first phase of the Fed’s unprecedented leap into shoring up the sagging prices of investment grade corporate debt and junk bonds. BlackRock has been selected by the New York Fed to be the investment manager for these bailout facilities and will begin Phase I today by buying up Exchange Traded Funds (ETFs) containing investment grade corporate bonds as well as junk bonds. Making the situation particularly dicey is that BlackRock just happens to be one of the largest purveyors of said ETFs. The screaming conflict-of-interest that this raises in the minds of many is not ruffling any feathers at the New York Fed (which is itself a bundle of conflicts wrapped in a … Continue reading →

By Pam Martens and Russ Martens: May 11, 2020 ~ The chart above from the November 2019 Federal Reserve report on the condition of the biggest banks in the U.S. shows that almost half were rated unsatisfactory. There have not been any reports since that November report until the latest one from the Fed which was released last week and dated May 2020. The new report carries this headline: “The banking industry came into 2020 in a healthy financial position.” This is part of the Fed’s strategy to lay its abysmal failure to supervise the mega Wall Street banks at the door of the coronavirus pandemic. It’s very easy today to get a totally bogus headline, one that is built completely on magical thinking, flashed across a TV screen in America. As the photo below illustrates, last Friday Steve Liesman of CNBC repeated this magical thinking from the Fed accompanied … Continue reading →

By Pam Martens and Russ Martens: May 10, 2020 ~ The Dow Jones Industrial Average rallied 455 points by the closing bell on Friday. It seemed sadistic to average folks. One hour before the stock market opened, the Bureau of Labor Statistics had reported the worst U.S. unemployment figure since the Great Depression (14.7 percent) along with the staggering loss of 20.5 million jobs in just the month of April. Within the first half hour of trading, the Dow was up more than 300 points. It then added to those gains in afternoon trading. None of the explanations offered by mainstream media to explain the incongruous stock trading were accurate. It was not because the stock market had anticipated worse or that the market was rallying because it thought the worst of the economic fallout was behind us. It was because the one emergency funding facility that the Federal Reserve … Continue reading →

By Pam Martens and Russ Martens: May 8, 2020 ~  The Office of Financial Research (OFR) was created under the Dodd-Frank financial reform legislation of 2010 to keep the Financial Stability Oversight Council (F-SOC) informed on emerging threats that have the potential to implode the financial system — as occurred in 2008 in the worst financial crash since the Great Depression. The Trump administration has gutted both its funding and staff. One of the early warning systems of an impending financial crisis that OFR was supposed to have created is the heat map above. Green means low risk; yellow tones mean moderate risk; while red tones flash a warning of a serious problem. On September 17, 2019, liquidity was so strained on Wall Street that the Federal Reserve had to step in and began providing hundreds of billions of dollars per week in repo loans. By January 27, 2020 (before … Continue reading →

By Pam Martens and Russ Martens: May 7, 2020 ~ Beginning on March 24 of this year, Larry Kudlow, the White House Economic Advisor, began to roll out the most deviously designed bailout of Wall Street in the history of America. After the Federal Reserve’s secret $29 trillion bailout of Wall Street from 2007 to 2010, and the exposure of that by a government audit and in-depth report by the Levy Economics Institute in 2011, Kudlow was going to have to come up with a brilliant strategy to sell another multi-trillion-dollar Wall Street bailout to the American people. The scheme was brilliant (in an evil genius sort of way) and audacious in employing an Orwellian form of reverse-speak. The plan to bail out Wall Street would be sold to the American people as a rescue of “Main Street.” It was critical, however, that all of the officials speaking to the … Continue reading →

By Pam Martens and Russ Martens: May 5, 2020 ~ Most Americans likely assume that Jerome Powell, the Chairman of the Federal Reserve, is an economist, like the prior chairs of the Fed over the past 40 years. He’s not. Powell is a former investment banker at the Wall Street firm, Dillon Read; a former partner at the controversial private equity and leveraged buyout firm, the Carlyle Group, which has spent over $1 billion over the past decade lobbying the federal government; and a former lawyer at Davis Polk, a Big Law firm that played a key role advising the government and Treasury in the 2008 Wall Street bailout. Powell’s background would be strange enough but now consider this. The Vice Chairman for Supervision at the Fed, Randal Quarles, who is in charge of supervising the largest and most dangerous Wall Street bank holding companies in the U.S., has an … Continue reading →

By Pam Martens and Russ Martens: May 4, 2020 ~ U.S. Treasury Secretary Steve Mnuchin and Federal Reserve Chairman Jerome Powell have apparently never walked down a Main Street in America. We make that statement because there is a huge disconnect between what’s really located on a typical Main Street and what’s in the bailout program they’ve designed and are calling the Main Street Lending Program (MSLP). Americans need to sit up and pay attention to what’s going on here because the U.S. Treasury has committed $75 billion of taxpayers’ money to support this program under the illusion that it’s going to mom and pop operations on a typical Main Street in America. That initial $75 billion will be levered up to $750 billion under the Fed’s ability to create money out of thin air, with taxpayers eating the first $75 billion of losses. Once the loans are originated by … Continue reading →

By Pam Martens and Russ Martens: May 1, 2020 ~ If a reputable polling outfit were to ask Americans what caused the current financial crisis on Wall Street, they would say the coronavirus COVID-19 pandemic. If Americans were asked in the same poll when the financial crisis on Wall Street started, they would tie it to outbreaks of the virus in the U.S. this year. But as the timeline below and the chart above clearly substantiate, the financial crisis on Wall Street began in earnest on September 17, 2019, almost four months before the first death from coronavirus anywhere in the world was reported in China on January 11, 2020 and five months before the first death in the U.S. was reported on February 29, 2020, having occurred one day earlier on February 28. (See the New York Times coronavirus timetable here.) This big disconnect between what people believe about … Continue reading →