A Bloomberg Column Says the Macho Culture and Risk-Taking on Wall Street Is Dead – in the Same Year that It Blew Up Archegos with 85 Percent Margin Loans

By Pam Martens: December 22, 2021 ~ Two interesting things happened this week just one day apart. On Monday, the Office of the Comptroller of the Currency, the regulator of national banks, released its quarterly report on “Bank Trading and Derivatives Activities” which documented insane levels of risk at four federally-insured banks, which have merged themselves with Wall Street’s trading casinos to form Frankenbanks. The very next day, an opinion columnist at Bloomberg News, Jared Dillian, wrote a column lamenting the “loss of risk-taking” on Wall Street which he appears to blame on “excessive compliance and regulation.” The column was given the pity-party title: “The Wall Street That I Once Knew No Longer Exists.” Compare these two very disparate views of the reality on Wall Street today. The OCC’s report shares this: “The total notional amount of derivative contracts held by banks in the third quarter increased by $978.0 billion (0.5 … Continue reading

The Fed Gets Its Ducks in a Row for the Next Wall Street Bailout; Quietly Adds Goldman Sachs Bank, Citibank to Its New $500 Billion Standing Repo Facility

Jerome Powell (Thumbnail)

By Pam Martens and Russ Martens: December 21, 2021 ~ Last Friday, with the public’s attention diverted to the surge in Omicron variant cases of COVID in the U.S. and holiday travelers’ attention focused on the safety of air travel and family gatherings, the Federal Reserve Bank of New York quietly announced, in a one sentence statement, that it was adding the following three federally-insured banks to its list of counterparties for its newly-minted $500 billion Standing Repo Facility: Citibank, Goldman Sachs Bank USA, and the New York Branch of Mizuho Bank. If you’re stunned that Goldman Sachs is allowed to own a federally-insured bank under existing U.S. law, see our previous report: Goldman Sachs’ Rich Man’s Bank Backstopped by You and Me. If you’re stunned that a New York branch of Mizuho Bank, part of the Japanese conglomerate Mizuho Financial Group, is able to have federal deposit insurance backstopped by … Continue reading

JPMorgan’s Crime Wave Continues, Calling into Question the Justice Department’s Lax Settlement with the Bank Last Year

Gary Gensler, SEC Chairman

By Pam Martens and Russ Martens: December 20, 2021 ~ JPMorgan Chase is the largest bank in the United States. It also has the scandalous distinction of having admitted to five criminal felony counts brought by the U.S. Department of Justice since 2014 and a breathtaking series of additional charges from other regulators. (See its Rap Sheet here.) On Friday, the Securities and Exchange Commission fined the securities unit of JPMorgan Chase $125 million for evading the ability of the SEC to adequately conduct its investigations of the bank because there was “firmwide” use by traders, supervisors and other personnel of non-official communications devices to conduct its business, while the firm failed to record and retain these messages as required by law. These new violations occurred despite similar conduct during the bank’s participation in the rigging of the foreign exchange market, which brought a criminal felony charge against the bank by … Continue reading

Nasdaq Plunge Provides a Sobering Look at What’s to Come

By Pam Martens and Russ Martens: December 17, 2021 ~ The Nasdaq Composite Index dropped 385 points yesterday for a loss of 2.47 percent. At the lows of the day, it was down 446 points at 15,119.49. That compares with a loss of just 29.79 points on the Dow Jones Industrial Average or 0.08 percent. The Nasdaq is packed with Big Tech stocks trading at nose-bleed multiples and meager dividends, or no dividends at all. Tesla is trading at a trailing price-to-earnings ratio of 302 and pays no dividend. Amazon is trading at a trailing P/E of 67 and pays no dividends. Tesla tanked 5 percent yesterday while Amazon lost 2.56 percent. Other Big Tech losers were Apple, down 3.93 percent; Microsoft, down 2.91 percent; and a whopping smackdown of Adobe, which shed 10.19 percent. Notably, Adobe also doesn’t pay a dividend and trades at a trailing P/E of 54. The … Continue reading

There’s a Nasty Public Battle Raging Over Control of the Federal Agency that Insures Bank Deposits

Jelena McWilliams, Chair of the FDIC

By Pam Martens and Russ Martens: December 16, 2021 ~ The Federal Deposit Insurance Corporation (FDIC) is the agency that prevents financial panics from turning into catastrophic runs on banks by providing taxpayer-backstopped and government guaranteed insurance on deposits, up to $250,000 per depositor. Its leadership and honest governance is thus critically important to every American. So when a nasty public brawl breaks out between the Board of Directors of the FDIC and its Chairwoman, Jelena McWilliams, every American needs to sit up and pay attention. On Tuesday, Rohit Chopra, President Biden’s nominee who has been confirmed to lead the Consumer Financial Protection Bureau (CFPB), which automatically makes him a member of the Board of Directors of the FDIC, posted at the CFPB’s website serious charges against FDIC Chairwoman McWilliams – effectively stating that she was staging a one-woman coup against her Board and usurping their power to govern the FDIC. … Continue reading

Senate Banking Committee Chair Says Stablecoins May Be “Outright Fraudulent”

Senator Sherrod Brown

By Pam Martens and Russ Martens: December 15, 2021 ~ The Senate Banking Committee held a hearing yesterday titled “Stablecoins: How Do They Work, How Are They Used, and What Are Their Risks?” Senator Sherrod Brown (D-OH), the Chair of the Committee, set the tone for the hearing by including the following poignant remarks in his opening statement: “Last month, I wrote to some of the biggest stablecoin issuers to get more information on how they manage their funds that back their coins, and to ask what rights their users have. Their responses were not particularly enlightening – and should lead us to assume most ordinary customers don’t have much in the way of rights at all. “So let’s be clear about one thing: if you put your money in stablecoins, there’s no guarantee you’re going to get it back. They call it a currency, implying it’s the same as having … Continue reading

Americans Know Very Little about Amazon Web Services that Knocked Out Large Swaths of East Coast Internet Services on December 7

Jeff Bezos

By Pam Martens and Russ Martens: December 14, 2021 ~ FINRA is Wall Street’s self-regulator. Last Tuesday afternoon, December 7, we attempted to access the part of its website that houses data on Wall Street’s Dark Pools. The web page was there but the data wouldn’t open. We contacted FINRA via email and asked what the problem was. We were told that it was “a result of today’s Amazon Web Services issue.” Our problem at FINRA’s website was just the tip of the iceberg last Tuesday. As a result of problems at Amazon Web Services (AWS), Amazon’s cloud-service network, customers couldn’t get through to Delta Air Lines on its AWS-supported phone lines; the Associated Press was limited in what it could publish for much of the day; Barron’s reported it was negatively impacted; apps for McDonald’s and Ticketmaster and streaming services from Disney and Netflix were also knocked offline. Amazon delivery … Continue reading

The Senate Banking Committee Has Subpoena Power; So Why Has Senator Elizabeth Warren Been Left to Investigate on Her Own?

Senator Elizabeth Warren Sends Lots and Lots of Letters

By Pam Martens and Russ Martens: December 13, 2021 ~ For years now, Wall Street On Parade has been reporting on the probing letters that Senator Elizabeth Warren (D-MA) has sent to Wall Street firms and their regulators in an effort to ferret out the details of systemic corruption and the looting of the American people. (See “Related Articles” below.) Throughout this letter writing campaign, Senator Elizabeth Warren has been a member of the powerful Senate Banking Committee – which has subpoena power. The new Chair of that Committee, Senator Sherrod Brown (D-OH), is also a progressive, like Warren. So why isn’t the Senate Banking Committee using its subpoena power instead of leaving Warren with nothing more than an inquiring mind and a pile of Word documents? According to the Congressional Research Service, the Senate Banking Committee has adopted a rule that requires a majority vote to issue a subpoena for … Continue reading

Wall Street – How Corrupt Is It? It’s Time for the Justice Department to Finally Answer that Question

Trader on New York Fed Trading Desk (Thumbnail)

By Pam Martens and Russ Martens: December 10, 2021 ~ On May 26 business media reported that the U.S. Department of Justice had opened a probe into the March collapse of the Archegos family office hedge fund. Archegos is believed to have leveraged $20 billion of its own capital into more than $100 billion in stocks and derivative exposure through margin loans tricked up as derivatives by some of the largest banks on Wall Street. One of the laws that the banks may have fallen afoul of is the Fed’s Regulation T. Under Reg T, broker dealers on Wall Street could not have loaned Archegos more than 50 percent to make its stock purchases. To get around this, the banks did not open a margin account for Archegos. Instead, the banks structured derivative contracts where they loaned as much as 85 percent of the money to Archegos to make the trades … Continue reading

The Fed Pulls a Dark Curtain Around Former Dallas Fed President, Robert Kaplan, and His Trading in S&P 500 Futures

Robert Kaplan, President of the Dallas Fed

By Pam Martens and Russ Martens: December 9, 2021 ~ On October 12, Wall Street On Parade filed a Freedom of Information Act (FOIA) request with the Federal Reserve Board of Governors seeking the specific dates on which former Dallas Fed President, Robert Kaplan, had made purchases and sales in S&P 500 futures contracts in 2020. According to Kaplan’s financial disclosure forms, he had made “multiple” transactions of over $1 million in S&P 500 futures during 2020, the year that he sat as a voting member of the Federal Open Market Committee and was privy to the Fed’s unprecedented interventions in the market during the economic upheaval from the pandemic. (See Kaplan’s financial disclosure forms from 2015 through 2020 here.) Kaplan was under very precise instructions on his annual financial disclosure form to provide the “month, day, year” of each of his purchases of securities and each of his sales. But … Continue reading