Search Results for: Federal Reserve

By Pam Martens and Russ Martens: November 20, 2017 Last Wednesday, Richard Cordray, the Director of the Consumer Financial Protection Bureau (CFPB), announced he would be stepping down from his post at the end of this month. Cordray is the former Attorney General of Ohio and there are rumors he may make a run for Governor there. The CFPB, a Federal agency, was created under the Dodd-Frank financial reform legislation of 2010. The legislation resulted from the greatest fraudulent wealth transfer from the middle class to the 1 percent since the Wall Street frauds of the late 1920s. Both periods ended in an epic financial crash that left the U.S. economy on life support. Since the financial crash of 2008, the U.S. economy has grown at an anemic 2 percent or less per year despite massive fiscal stimulus and unprecedented bond purchases (quantitative easing) by the Federal Reserve. Despite the … Continue reading →

By Pam Martens and Russ Martens: November 17, 2017 U.S. Treasury Secretary Steven Mnuchin appears to have inaugurated a perpetual bring your wife to work day. It’s become so farcical that it frequently feels like the United States Treasury Department has morphed into a low-budget, badly scripted reality TV show where the female star is so out-of-touch that she must continually scurry about in her haute couture erasing the haughty things she has written about the little people on multiple continents. We’ll get to that shortly, but first some background: It all started back on January 19 when actress and then fiancée Louise Linton sat by her man during his Senate Finance Committee confirmation hearing to become U.S. Treasury Secretary. At the hearing, Democratic Senator Ron Wyden of Oregon had this to say about his repugnance to see Mnuchin fill the post as U.S. Treasury Secretary: “Mr. Mnuchin’s career began … Continue reading →

By Pam Martens and Russ Martens: November 9, 2017 In November of 2016, there was more than 100 basis points (one percent) difference between the yield on the 2-year and the 10-year U.S. Treasury Note. As of this morning, that difference stood at 68 basis points, a dramatic flattening in the yield curve and harkening to the levels seen during the onset of the financial crisis in 2007. As of 7:48 a.m. this morning, the spread between the 10-year Treasury Note (yielding 2.33 percent) and 30-year Treasury Bond (yielding 2.81 percent) is even smaller, at a meager 48 basis points or less than half of one percent. It is a serious commentary on the bizarre financial times in which we live that a fixed income investor would be rewarded with less than half a percent of additional income to add 20 years of risk to the maturity date on his … Continue reading →

By Pam Martens and Russ Martens: November 8, 2017 According to the now publicly available transcript of the testimony that former U.S. Treasury Secretary Robert Rubin gave before the Financial Crisis Inquiry Commission (FCIC) on March 11, 2010, he was not put under oath, despite the fact that the bank at which he had served as Chairman of its Executive Committee for a decade, Citigroup, stood at the center of the financial crisis and received the largest taxpayer bailout in U.S. history. The fact that Rubin was not put under oath might have had something to do with the fact that he showed up with a team of six lawyers from two of the most powerful corporate law firms in America: Paul, Weiss, Rifkind, Wharton & Garrison and Williams & Connolly. One of Rubin’s lawyers from Paul, Weiss was Brad Karp, the lawyer who has gotten Citigroup out of serial … Continue reading →

By Pam Martens and Russ Martens: November 7, 2017 On March 11, 2016, the National Archives released a trove of documents related to the work of the Financial Crisis Inquiry Commission (FCIC) and their investigation of the causes of the 2007-2010 financial crisis. As a result of reviewing those documents, Senator Elizabeth Warren sent a September 15, 2016 letter to the Inspector General of the Justice Department and to then FBI Director James Comey seeking to find out why the Justice Department had not prosecuted any of the individuals or corporations that were referred to it by the FCIC. Senator Warren indicated in her letter to James Comey that her staff had “identified 11 separate FCIC referrals of individuals or corporations to DOJ in cases where the FCIC found ‘serious indications of violation[s]’ of federal securities or other laws consistent with this statutory mandate. Nine specific individuals were implicated in … Continue reading →

By Pam Martens and Russ Martens: November 1, 2017 Yesterday, the New York Times ran an error-filled article on the indictment of Trump adviser George Papadopoulos that seemed intent on cementing the notion that Russia hacked thousands of emails from the Democratic National Committee (DNC) and then offered those hacked emails to the Trump campaign to smear dirt on Hillary Clinton during the 2016 presidential campaign. The problem was that the actual Federal indictment unsealed on Monday against Papadopoulos made no such claim regarding emails hacked at the Democratic National Committee. Where the thousands of emails referenced by the Russians actually came from was not spelled out in the indictment. They could have just as easily been emails hacked from Hillary Clinton’s unsecure server in the basement of her home during her time as Secretary of State. Instead of correcting its own erroneous reporting, today’s New York Times is blasting … Continue reading →

By Pam Martens and Russ Martens: October 24, 2017 Matthew Garrahan dropped a bigger bombshell in the Financial Times yesterday than even he realizes. Garrahan named the law firm that had crafted a gag order in 1998 to silence two women from ever speaking about their encounters with Harvey Weinstein. One woman, Zelda Perkins, was an assistant to Weinstein in London and charged him with egregious sexual harassment. The other unnamed female colleague charged Weinstein with sexual assault. The two were paid $125,000 each and given an iron-clad gag order. The terms of the gag order were so confidential that the women were not even allowed to have a full copy of what they had agreed to, just a summary of some of its terms. The law firm representing Weinstein with the settlements and gag orders (officially called non-disclosure agreements) was Allen & Overy – the London derivatives powerhouse that … Continue reading →

By Pam Martens and Russ Martens: October 23, 2017 Over the past month, with little media attention, both Citigroup and Merrill Lynch have received fines from regulatory bodies for failure to properly report their trading in derivatives – an opaque trading arena that played a significant role in bringing down both firms during the financial crisis. As reported by the Government Accountability Office (GAO) in 2011, Citigroup received $2.5 trillion in cumulative, secret low cost loans from the Federal Reserve during the 2007-2010 financial crisis while Merrill received $1.9 trillion. These loans, many at almost zero interest rates, were made without the authorization or awareness of Congress. (See GAO chart below.) The loans to the two firms were on top of the publicly disclosed and Congress-approved TARP bailout funds. Significant portions of the money loaned to Citigroup and Merrill Lynch were authorized by the Federal Reserve to be funneled to the … Continue reading →

By Pam Martens and Russ Martens: October 16, 2017 Hurricanes, wildfires, the multiple investigations of Russia’s involvement in the 2016 presidential election and the calamity-du-jour in the Trump White House are gobbling up an outsized share of digital and print news pages at corporate media. What’s gone missing is intrepid, in-depth investigations of Wall Street’s latest scam against the public – even at corporate media outlets purporting to focus on Wall Street. Consider today’s front page of the Wall Street Journal: there’s an article on health care; central banks and stimulus; Iraqi forces and Kurdish fighters; how Blackstone Group is on the prowl for retail investors; and a curious report on long-haul truckers cooking up jambalaya and Thai peanut pork (you can’t make this stuff up). There is nothing about an investigation of a mega Wall Street bank; the dangers these behemoths continue to pose to taxpayers and the U.S. … Continue reading →

By Pam Martens and Russ Martens: October 5, 2017 According to Federal Reserve statistics, as of the end of the first quarter of this year, the U.S. municipal bond market consisted of $3.8 trillion of debt outstanding with retail investors owning 42 percent of the market. Life insurance companies, property and casualty insurers, banks, mutual funds and foreign buyers are also major holders of municipal bonds. Municipal bonds have performed well as a class over a century of booms and busts. They came through the Great Depression with an extremely low default rate. General obligation municipal bonds (GOs) are backed by the full faith and credit and taxing power of a jurisdiction like a state or county or city and GOs with AAA ratings are typically viewed as second in safety to issues of the U.S. government.  Municipal bonds issued to finance a project are classified as revenue bonds and … Continue reading →