Search Results for: Federal Reserve

By Pam Martens and Russ Martens: April 11, 2020 ~ On Thursday, knowing that a three-day Easter weekend was coming and the attention of the public would be elsewhere, the Federal Reserve announced that it would allow two of its emergency lending programs to begin buying junk bonds. Those are bonds with less than an investment-grade credit rating, meaning they have a greater likelihood of defaulting. The Fed is not simply accepting junk bonds as collateral for loans, it will actually be buying junk bonds — potentially hundreds of billions of dollars of them. Two of the popular junk bond ETFs, iShares iBoxx High Yield Corporate Bond ETF (symbol HYG) and SPDR Bloomberg Barclays High Yield Bond ETF (symbol JNK) closed the trading day on Thursday up 6.55 and 6.71 percent, respectively, on the announcement. Those ETFs had been plunging in price for most of the month of March. For … Continue reading →

By Pam Martens and Russ Martens: April 9, 2020 ~ The Fed’s advance men were all over the media today attempting to transform a sow’s ear into a silk purse (or, as they say on Wall Street, put lipstick on a pig). The Fed surprised the market today with the stunning announcement that it was going to start buying up junk bonds from the markets after they had been cratering for most of the month of March. That was the pig. The lipstick it applied was worded like this: “The Federal Reserve on Thursday took additional actions to provide up to $2.3 trillion in loans to support the economy. This funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.” Households and small businesses don’t issue junk bonds. Neither do most state and local … Continue reading →

By Pam Martens and Russ Martens: April 9, 2020 ~ For the first time in the history of the Federal Reserve, it has signed on to a plan with Congress to nationalize the unmanageable debts of global banks and other multinational corporations and put the U.S. taxpayer on the hook for the losses. Conducting the bulk of these programs will be the Federal Reserve Bank of New York, known as the New York Fed, which is a private institution owned by (wait for it) multinational banks. Because the New York Fed is owned by multinational banks and is allowed to create trillions of dollars out of thin air to conduct bailouts of global banks and multinational corporations since it created this precedent in 2008, it is effectively functioning as a multinational central bank with the Federal Reserve in Washington, D.C. and Fed Chairman Jerome Powell little more than titular props … Continue reading →

By Pam Martens and Russ Martens: April 6, 2020 ~ On Thursday, March 26, in the midst of a growing panic on Wall Street over a lack of liquidity for toxic debt, the Federal Reserve Chairman Jerome Powell did something unprecedented. He appeared live on the Today show. His interviewer, Savannah Guthrie, opened the interview by noting that one writer had said that the Fed can simply conjure money out of thin air. (It can.) Guthrie asked Powell if there was any limit to the amount of money the Fed was willing to put into the economy to keep it afloat. Her question should have been: is there any limit to the amount of money the Fed will conjure out of thin air to keep Wall Street afloat? Powell said this: “In certain circumstances like the present, we do have the ability to essentially use our emergency lending authorities and … Continue reading →

By Pam Martens and Russ Martens: April 5, 2020 ~ According to the Uniform Bank Performance Report for December 31, 2019 at the Federal Financial Institutions Examination Council (FFIEC), JPMorgan Chase, whose Chairman and CEO, Jamie Dimon, has perpetually bragged about its “fortress balance sheet,” has $2.3 trillion in exposure on its balance sheet and $2.9 trillion in off-balance sheet exposure. The off-balance sheet exposure includes things like credit card lines of credit that have been issued but not tapped as of December 31, 2019; corporate standby letters of credits that have been issued but not yet tapped; securitized assets that have been sold with recourse back to JPMorgan Chase’s balance sheet; real estate loans committed but not yet funded; and a staggering $1.2 trillion in credit derivatives – the same instruments that brought on an FBI probe and congressional investigations of the bank in 2012 and cost the bank … Continue reading →

By Pam Martens and Russ Martens: April 2, 2020 ~ At 4:30 p.m. today, the Federal Reserve released the shocking details of what it has been up to in the past week. Its balance sheet has skyrocketed from $5.3 trillion as of March 25 to $5.85 trillion yesterday, a growth of $557 billion in one week’s time. One of the factors affecting this growth was a $142 billion jump in the amount of its Central Bank Liquidity Swaps, where it provides dollars to foreign central banks in exchange for their local currency. During the last financial crisis, some of these dollar swaps were used to bail out global foreign banks that were in trouble. Given the current condition of numerous European banks, and their ties through derivatives to Wall Street’s mega banks, there is every reason to believe these dollar swaps are another thinly disguised bailout of a Frankenbank-financial system … Continue reading →

By Pam Martens and Russ Martens: April 2, 2020 ~ Yesterday CNBC reported that Citigroup is one of the banks selected by the Small Business Administration to handle billions of dollars earmarked in last week’s stimulus bill to help small businesses get back on their feet and keep their employees paid during the coronavirus crisis. Citigroup’s Citicorp subsidiary was charged with, and pleaded guilty to, a criminal felony count brought by the U.S. Department of Justice on May 20, 2015 for its role in rigging foreign currency trading. Its rap sheet for a long series of abuses to its customers and investors since 2008 is nothing short of breathtaking. (See its rap sheet at the end of this article.) During the financial crash of 2007 to 2010, Citigroup received the largest bailout in global banking history after its former top executives had walked away with hundreds of millions of dollars … Continue reading →

By Pam Martens and Russ Martens: April 1, 2020 ~ On March 26 Federal Reserve Chairman Jerome Powell went on the Today show to deliver one message: “There is nothing fundamentally wrong with our economy.” Recently U.S. Treasury Secretary Steve Mnuchin has appeared on the White House lawn to tell reporters that this is nothing like the last financial crisis. Fed regional bank presidents have appeared on cable news asserting that the Wall Street banks have plenty of capital and today’s economic distress is caused solely by the coronavirus. Even New York Times columnist and perpetual Wall Street cheerleader, Paul Krugman, was on CNBC this week reassuring viewers that today’s problem was not like the last financial crisis. And yet – the facts keep getting in the way of this “official” narrative. The first coronavirus COVID-19 case was discovered in China in December 2019 and didn’t become a major issue … Continue reading →

By Pam Martens and Russ Martens: March 31, 2020 ~ From December 2007 to November 10, 2011, the Federal Reserve, secretly and without the awareness of Congress, funneled $19.6 trillion in cumulative loans to bail out the trading houses on Wall Street. Just 14 global financial institutions received 83.9 percent of those loans or $16.41 trillion. (See chart above.) A number of those banks were insolvent at the time and did not, under the law, qualify for these Fed loans. Significant amounts of these loans were collateralized with junk bonds and stocks, at a time when both markets were in freefall. Under the law, the Fed is only allowed to make loans against “good” collateral. Six of the institutions receiving massive loans from the Fed were not even U.S. banks but global foreign banks that had to be saved because they were heavily interconnected to the Wall Street banks through … Continue reading →

By Pam Martens and Russ Martens: March 30, 2020 ~ In 2015, the legendary Wall Street investor, Carl Icahn, called BlackRock “an extremely dangerous company.” (See video clip below.) Icahn was specifically talking about BlackRock’s packaging of junk bonds into Exchange Traded Funds (ETFs) and calling them “High Yield,” which the average American doesn’t understand is a junk-rated bond. The ETFs trade during market hours on the New York Stock Exchange, giving them the aura of liquidity when one needs it. Icahn said: “I used to laugh with some of these guys…I used to say, you know, the mafia has a better code of ethics than you guys. You know you’re selling this crap.” Icahn warned that “if and when there’s a real problem in the economy, there’s going to be a rush for the exits like in a movie theatre, and people want to sell those bonds, and think … Continue reading →