Search Results for: Federal Reserve

By Pam Martens and Russ Martens: July 9, 2018 Since 1999 the chief risk officers of the Wall Street banks that blew themselves up in 2008 because of reckless and irresponsible risk practices have been meeting in secret and calling themselves the Counterparty Risk Management Policy Group (CRMPG). Their plan was to periodically release erudite-sounding reports to regulators suggesting that Wall Street could police itself under a set of “Guiding Principles” in order to perpetuate its off balance sheet debt bombs, unregulated OTC derivatives and a self-regulation regime. The group was led by former New York Fed President E. Gerald Corrigan who then moved on to a lucrative career at Goldman Sachs. Representatives from banks like Lehman Brothers, Citigroup, Bear Stearns and Merrill Lynch sat on key committees of the Group and helped to formulate the “Guiding Principles” for Wall Street. Lehman Brothers filed bankruptcy on September 15, 2008 – … Continue reading →

By Pam Martens and Russ Martens: July 6, 2018 ~ Last year Simon & Schuster released The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives by the Pulitzer Prize winning journalist at ProPublica, Jesse Eisinger. If you read nothing else this summer, you should read this book followed by Nomi Prins’ Collusion: How Central Bankers Rigged the World. The two books provide Americans with a comprehensive understanding of how the Justice Department, Federal regulators, a growing number of Federal judges and the central bank of the United States known as the Federal Reserve have been corrupted by corporate influence. To a large degree, they now serve their corporate masters, not the American people. The Chickenshit Club is a lively, fascinating and disturbing look behind the scenes at the U.S. Justice Department, its U.S. Attorney’s Office for the Southern District of New York and the judges and lawyers who … Continue reading →

By Pam Martens and Russ Martens: July 3, 2018 ~ Here’s the thing about stock market bubbles: they can last far longer than even expert analysis suggests they should. But correctly defining a stock market as an unsustainable bubble is still a worthy exercise since it clarifies how much one stands to lose when the bubble does eventually pop. One of the market watchers who is unabashedly calling for a major market correction – potentially in the realm of 60 percent from peak to trough – is John P. Hussman, President of Hussman Investment Trust. In his most recent market commentary, Hussman writes: “Unlike much of the recent bull market, present market conditions reflect not only extreme valuations (including a full syndrome of overvalued, overbought, overbullish features), but also divergence and dispersion in our measures of market internals. It’s that deterioration in market internals that threatens to unleash the beast … Continue reading →

By Pam Martens and Russ Martens: June 29, 2018 ~ The U.S. Federal Reserve, the country’s central bank that is supposed to serve the interests of the nation, gave the largest Wall Street banks a big, irresponsible gift yesterday. The big banks will now be able to spend approximately $170 billion buying back their own stock and paying out increased dividends to shareholders instead of doing what banks are supposed to do: make loans to worthy businesses to stimulate the U.S. economy. But don’t expect to find that critical news on the front page of your local newspaper. The front pages of newspapers across America proved once again today that chaos in the running of the Federal government is dominating news reporting while it continues to relegate to the back pages the alarming risks that are growing again on Wall Street. This raises the question as to whether the chaos … Continue reading →

By Pam Martens and Russ Martens: June 27, 2018 ~  Despite President Donald Trump’s leanings toward authoritarianism, he is likely to learn a hard truth this year and next – that the Federal Reserve can make or break his presidency by delivering up to three different gut punches to the markets, which are very likely to spill over into the economy. And without a good economy, even Trump’s most fervent supporters may begin to doubt his omnipotence. For starters, next Monday the Federal Reserve is scheduled to shrink its purchases of U.S. Treasury securities and Federal agency debt and mortgage-backed securities by another $10 billion a month, from a shrinkage of $30 billion to $40 billion. And by October 1 of this year, the Fed will move from draining $40 billion a month from the markets to draining $50 billion, according to its previously announced schedule. (See chart below.) At … Continue reading →

By Pam Martens and Russ Martens: June 26, 2018 ~ Over the past week, everyone from the New York Times to Mother Jones is writing about the yield curve – a topic previously considered so esoteric by newspaper editors that only an economic nerd of a reporter would dare suggest writing a story about it. The concern today is that the yield curve (a measure of short, intermediate and long-term interest rates) is getting very close to inverting. An inverted yield curve occurs when short rates are higher than longer term rates. Under normal circumstances, an investor should be rewarded with a higher yield for taking greater risk in buying a longer-dated bond since future inflation would erode his purchasing power from the interest payments on the longer bond over time. At Wall Street On Parade, we’ve been calling our readers’ attention to what’s happening with the yield curve since … Continue reading →

By Pam Martens and Russ Martens: June 18, 2018 ~  Goldman Sachs CEO Lloyd Blankfein famously said in 2009 at the height of the financial crisis that he was “doing God’s work.” What Goldman Sachs was actually doing in secret at that time was receiving billions of dollars in undisclosed loans from the Federal Reserve – often at the insanely low interest rate of .01 percent. Goldman was also living off billions of dollars in publicly acknowledged taxpayer bailouts, while paying out obscene bonuses to its executives, including those who had shorted (made bets against) the U.S. housing market as it collapsed into the greatest disaster since the Great Depression. (See related articles below.) Last week we received an unsolicited direct mail offer from Goldman Sachs. It was offering us the ability to borrow a personal loan ranging from $3500 to $40,000 with rates ranging from 6.99 to 24.99 percent. The … Continue reading →

By Pam Martens and Russ Martens: June 13, 2018 ~  Yesterday the Securities and Exchange Commission (SEC) quietly dropped a bomb on the relationship that the behemoth Wall Street firm Merrill Lynch has with its institutional clients. For those willing to skip past the timid press release from the SEC and dig carefully through the Administrative Proceeding Order, there was this startling revelation: Merrill Lynch had charged obscene markups (profits for the house) on bond trades over a three and a half-year period that were in two cases cited 23 times and 3 times the industry prescribed legal limit of less than 5 percent. Merrill Lynch agreed to settle the charges by paying $10.5 million in disgorgement to its ripped-off customers and to pay penalties of $5.2 million to the SEC. Merrill Lynch is best known as a firm with 15,000 brokers (financial advisors) in branch offices across the United … Continue reading →

By Pam Martens and Russ Martens: June 5, 2018 ~ The Dodd-Frank financial reform legislation that was passed in 2010 required that publicly traded companies report publicly how much the CEO makes compared to the median salary of workers. The Securities and Exchange Commission, with its close ties to Wall Street, stonewalled for years in passing the final rule and had to be pressured and publicly embarrassed in open letters from members of Congress before it finally implemented the rule. As a result, eight years later, we are finally seeing the hard numbers that define CEO greed in America. In May, Democratic Congressman Keith Ellison from Minnesota’s 5th District released a study on the new data that was being released. The study was titled “Rewarding or Hoarding: An Examination of Pay Ratios Revealed by Dodd-Frank.” Among the key findings in the study were the following: Two-thirds of the richest 1 … Continue reading →

By Pam Martens and Russ Martens: June 1, 2018 ~ Yesterday the Wall Street Journal dropped a bombshell into financial markets with a report that “about a year ago” the U.S. Federal Reserve had “designated Deutsche Bank AG’s sprawling U.S. business as being in a ‘troubled condition.’ ” The Financial Times added to market angst by also reporting yesterday that the FDIC, which provides Federal deposit insurance to U.S. banks, has designated Deutsche Bank as a “problem bank” sometime within the past year. Until yesterday, both of these actions by Federal regulators were secret and unknown to Deutsche Bank’s shareholders, to the markets and to the New York Stock Exchange where Deutsche Bank’s stock trades in the U.S. Over the past year, Deutsche Bank’s stock has lost more than 40 percent of its value as a result of a lack of positive earnings for three years and serial regulatory lapses … Continue reading →