Search Results for: Federal Reserve

By Pam Martens and Russ Martens: September 16, 2024 ~ It is rare for a book to be so comprehensive and insightful that it provides a roadmap for the future – especially when its cast of characters are the lawyered-up megabanks on Wall Street and their legions of lobbyists and public relations flacks. We’re referring to Taming the Megabanks: Why We Need a New Glass-Steagall Act by Arthur E. Wilmarth, Professor Emeritus of Law at George Washington University. Last Tuesday, the Federal Reserve completely capitulated to the demands of the Wall Street megabanks on its plan to dramatically raise capital levels at the megabanks — the so-called Basel III Endgame. The Fed, via its Vice Chair for Supervision, Michael Barr, announced it was cutting the required capital it had formally proposed in July of 2023 by more than half and will continue to allow the megabanks to use their own dodgy … Continue reading →

By Pam Martens and Russ Martens: September 12, 2024 ~ When the next megabank blows up from its derivative exposure, you can add the names Jamie Dimon and Patick McHenry to former Republican Congressmen Randy Hultgren and Kevin Yoder as four of the men who greased the skids for another derivatives banking crisis. (For our report on the role played by Hultgren and Yoder, see our 2021 report here.) Dimon and McHenry are the latest lead players in the disastrous history of derivative regulation in the U.S. Dimon is the Chair and CEO of the riskiest and largest bank in the United States, JPMorgan Chase. After his bank lost $6.2 billion gambling in derivatives in London in 2012 – using deposits from his federally-insured bank – Dimon would, to rational minds, seem like the least qualified candidate to be giving advice to his banking regulators on how much capital megabanks need … Continue reading →

By Pam Martens and Russ Martens: September 5, 2024 ~ Most market watchers rely on the monthly margin debt figures published by Wall Street’s self-regulator, FINRA, as the reliable gauge in determining how much of securities trading on Wall Street is being done with borrowed money, known as margin debt. According to the FINRA data, as of March 31, 2024, margin debt stood at $784.136 billion. Unfortunately, FINRA only has access to margin debt data filed by the brokerage firms it regulates (also known as brokers and dealers). Thanks to the repeal of the Glass-Steagall Act in 1999, which allowed federally-insured banks to be gobbled up by the trading casinos on Wall Street, the vast bulk of margin debt is now being loaned out not by brokerage firms but by giant banks where the U.S. taxpayer will be on the hook for a bailout if they go belly up from bad … Continue reading →

By Pam Martens and Russ Martens: September 4, 2024 ~ It appears that Senator Elizabeth Warren was spot on in her assessment of the lack of a backbone for Federal Reserve Chairman Jerome Powell when it comes to raising capital requirements on the powerful megabanks on Wall Street. At a March 7 Senate Banking Committee hearing in which Powell was appearing as a witness, Warren said this: “Despite all you said last year when the banks failed [in the spring banking crisis of 2023] about supporting Vice Chair Barr’s recommendations to strengthen rules for big banks, public reporting now says that you are driving efforts inside the Fed to weaken the capital rule. You even told the House Financial Services Committee representatives yesterday that you think it’s ‘very plausible’ that you withdraw the rule.” The capital rule that Senator Warren is referring to was proposed more than a year ago by … Continue reading →

By Pam Martens and Russ Martens: August 27, 2024 ~ The P.R. genius at JPMorgan Chase that thought it would be a good idea to have Jamie Dimon lecture the next president of the United States on how to run the country in an OpEd (paywall) at the Washington Post will likely be seeking a career change soon. Dimon is the Chairman and CEO of the largest and riskiest bank in the United States. Under Dimon’s tenure, the bank has racked up five felony counts which showcase Dimon as the worst possible source of sound leadership advice. In 2014, the bank was charged with laundering money for decades for the biggest Ponzi artist in U.S. history – Bernie Madoff. In 2015, the bank was charged with being part of a bank cartel that rigged foreign currency markets. And in 2020, the bank was charged with two more felony counts for engaging … Continue reading →

By Pam Martens and Russ Martens: August 20, 2024 ~ As indicated on the above graph, as of December 31, 2023, Goldman Sachs Bank USA, JPMorgan Chase Bank N.A., Citigroup’s Citibank and Bank of America held a staggering total of $168.26 trillion in derivatives out of a total of $192.46 trillion at all federally-insured U.S. banks, savings associations and trust companies. That’s just four banks holding 87 percent of all derivatives at all 4,587 federally-insured financial institutions in the U.S. that existed as of December 31, 2023. You might be asking yourself the very valid question as to why the Dodd-Frank financial reform legislation of 2010, that followed the Wall Street financial quake of 2008, didn’t correct the derivatives gambling that played a central role in crashing the U.S. financial system. For why the threat of derivatives never actually went away, see our report: Meet the Two Congressmen Who Facilitated Today’s Derivatives … Continue reading →

By Pam Martens and Russ Martens: August 15, 2024 ~ A fascinating new academic paper has been released. Its title is “The Myth of Fed Political Independence.” Its premise is this: “The much-vaunted independence of the Federal Reserve is a myth. The Fed is not the bastion of sound monetary policy. Rather, it is just another politically coopted agency of the federal government.” The study asserts further that “Something like the Stockholm syndrome seems to describe the institutional relationship that exists between the U.S. Congress and the White House (the captors), and the Federal Reserve (the captives). The paper is written by Thomas Joseph Webster, Professor Emeritus of Economics at Pace University’s Lubin School of Business, who has written extensively on the Fed and the role that its quantitative easing has played in ballooning budget deficits, the national debt and inflation. Dr. Webster previously worked as an international economist with the … Continue reading →

By Pam Martens and Russ Martens: August 14, 2024 ~ It is now one of the unspoken but immutable dictates on Wall Street: with each new banking crisis, the Federal Reserve will quickly create an emergency bailout program and give it a three to four letter abbreviation so that it vanishes into an alphabet soup blur of Fed bailout programs that preceded it. The latest iteration came in the spring of 2023 in response to a run on federally-insured banks that federal regulators had allowed to get in bed with crypto and/or had allowed to binge on uninsured deposits. The Fed quickly launched the Bank Term Funding Program (BTFP) on March 12, 2023. BTFP joined the copious iterations from the Fed’s COVID-19 related bailouts and the Fed’s 2007-2010 bailouts with names like the Primary Dealer Credit Facility (PDCF), Commercial Paper Funding Facility (CPFF), Money Market Mutual Fund Liquidity Facility (MMLF), Term … Continue reading →

By Pam Martens and Russ Martens: August 13, 2024 ~ Here’s a look at three FDIC-insured banks that have lost 69 percent, 57 percent and 40 percent, respectively, of their share price year-to-date. The decline represents the change from their share price at the close on the last trading day of 2023 (Friday, December 29) and their close yesterday, (Monday, August 12, 2024). New York Community Bancorp (Ticker NYCB): YTD Stock Performance, Down 69.33 Percent New York Community Bancorp, Inc. is the parent company of Flagstar Bank, N.A., headquartered in Hicksville, Long Island, New York with 420 branch offices in 12 states. As of March 31, 2024, Flagstar had $112.8 billion of assets, ranking it the 28th largest bank in the United States according to a listing compiled by the Federal Reserve. For more on what’s going on at NYCB, see our report: Steve Mnuchin, Trump’s Treasury Secretary/Foreclosure Kingpin, Joins with … Continue reading →

By Pam Martens and Russ Martens: August 12, 2024 ~ According to a report at the U.S. Treasury’s Office of Financial Research (OFR), the Gross Notional Exposure at hedge funds has skyrocketed by 24.5 percent in the span of one year: from $22.946 trillion on March 31, 2023 to $28.579 trillion on March 31, 2024. (Run your cursor along the top green line at this link to observe the stunning growth in hedge fund exposures despite the banking crisis in the spring of 2023 when the second, third and fourth largest banks blew up.) Gross Notional Exposure (GNE) is defined by OFR as “the sum of the absolute value of long and short exposures, including those on and off the balance sheet.” The OFR was created under the Dodd-Frank financial reform legislation of 2010 to keep bank and market regulators informed of growing risks, in the hope of preventing another financial … Continue reading →