By Pam Martens and Russ Martens: June 4, 2020 ~  BlackRock, the international investment management firm run by billionaire Larry Fink, has played an outsized role in Federal Reserve bailouts of Wall Street. As it turns out, it’s also been quietly managing hundreds of billions of dollars for more than five million federal government employees in their retirement plan, known as the Thrift Savings Plan (TSP). During the last financial crisis of 2007 to 2010, the Federal Reserve gave BlackRock no-bid contracts to manage the toxic assets held in three programs known as Maiden Lane, Maiden Lane II and Maiden Lane III. These were Special Purpose Vehicles set up by the New York Fed. Maiden Lane purchased $30 billion of toxic assets from Bear Stearns as an inducement by the New York Fed to get JPMorgan to purchase the good parts of Bear Stearns. Maiden Lane II purchased mortgage-backed securities … Continue reading →

By Pam Martens and Russ Martens: June 3, 2020 ~ U.S. President Donald Trump, the leader of a country which heretofore viewed itself as a beacon of democracy to the rest of the world, is now using military helicopters, a designated commander in combat fatigues, and military police to protect himself from peaceful protesters outside the White House. Trump has bigger, and more dangerous plans. James LaPorta of the Associated Press reported yesterday that combat troops from the 82nd Airborne have been moved just outside of Washington D.C., are armed with bayonets, and may be called in by the President. The AP reported as follows: “On Tuesday, roughly 700 members of the Army’s 82nd Airborne Division had arrived at two military bases near Washington. Another 1,400 soldiers are ready to be mobilized within an hour, the two Pentagon officials said. The soldiers are armed and have riot gear as well … Continue reading →

By Pam Martens and Russ Martens: June 2, 2020 ~ The words of the President of the United States over the past three days suggest that he is determined to be a wartime president and that he has found the enemy: it’s the American people. As racial justice protests raged in cities across the United States on May 30 over the murder of George Floyd in broad daylight at the hands of four policemen in Minneapolis, President Donald Trump tweeted that if the protesters had breached the fence at the White House, “they would have been greeted with the most vicious dogs, and most ominous weapons, I have ever seen.” (Considering that the President avoided military service on the basis of bone spurs, he probably hasn’t actually seen too many ominous weapons.) Yesterday, President Trump held a phone conference with state Governors around the U.S. He said this at one … Continue reading →

By Pam Martens and Russ Martens: June 1, 2020 ~ As we watched the dangerous scenes of protesters interacting with riot police and the ransacking of banks and businesses in cities across the United States this past weekend, a warning from the 19th century abolitionist, Frederick Douglass, came to mind: “Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe.” The protests last week and this past weekend were sparked by unspeakable cellphone videos of a Minneapolis policeman, Derek Chauvin, torturing and murdering George Floyd with his knee crushing his throat for almost nine minutes as Floyd lay handcuffed and pinned face down on the ground by Chauvin and three other police officers. Only Chauvin has been charged with third degree … Continue reading →

By Pam Martens and Russ Martens: May 29, 2020 ~ On May 29, 2019, the Federal Reserve’s balance sheet stood at $3.9 trillion. As of this past Wednesday, May 27, 2020, the Fed’s balance sheet had skyrocketed to $7.145 trillion, an increase of 83 percent in one year’s time. But the explosion in the Fed’s balance sheet cannot be attributed solely to the economic downturn caused by the COVID-19 pandemic. The math and the timeline simply do not support that argument. According to the timeline at the World Health Organization, on December 31, 2019, China first reported a cluster of cases of pneumonia which were identified in early January to be the coronavirus now known as COVID-19. These were the first known cases anywhere in the world. But on December 31, 2019, the Federal Reserve was already deep into a debt crisis in the United States. We know that from … Continue reading →

By Pam Martens and Russ Martens: May 28, 2020 ~ The bankruptcy epidemic in the U.S. started last year, long before any COVID-19 pandemic had touched down. U.S. retailers ranked among the greatest casualties of 2019 with a total of 17 bankruptcies. Big names among the retail bankruptcies in 2019 included Gymboree on January 16; Charlotte Russe on February 3; Things Remembered on February 6; Payless ShoeSource on February 18; Charming Charlie on July 11; Barneys New York on August 6; and Forever 21 on September 29. Now, the retail shutdowns resulting from COVID-19 have simply accelerated what was already a growing trend of companies seeking relief from debts they cannot pay back. Some of the major bankruptcies this year mean permanent, not temporary, job losses. The 118-year old J.C. Penney Co. had 846 stores when it filed for bankruptcy on May 15 of this year. It said it plans … Continue reading →

By Pam Martens and Russ Martens: May 27, 2020 ~ On May 13 the House Financial Services’ Subcommittee on Consumer Protection and Financial Institutions held a virtual roundtable with federal regulators. One of the regulators in attendance was the Vice Chair for Supervision at the Federal Reserve, Randal Quarles. At the very end of what evolved into a roundtable beset with static and inaudible passages, it was Utah Congressman Ben McAdams’ turn to ask questions. McAdams’ voice was sharp and crisp. He politely said he had a question about the corporate bond buying program that the Fed was launching (for the first time in its 107-year history). The exchange went as follows: McAdams: “Do you anticipate holding these investments through the life of the purchased bond or do you anticipate selling them at a date TBD [to be determined]? Quarles: “Our intention is to buy and hold.” That answer from … Continue reading →

By Pam Martens and Russ Martens: May 26, 2020 ~  If you are an individual and you want to buy stocks on margin at a brokerage firm in the U.S., under Federal Reserve Board Regulation T the brokerage firm can lend you a maximum of 50 percent of the total initial purchase price. Not all stocks are eligible for margin. There are also maintenance margin requirements imposed by the industry, stock exchanges and the brokerage house itself if the stock value drops after the initial purchase, which could trigger a margin call and subject you to having to deposit more cash or securities under penalty of having your account liquidated at a loss.) Regulation T grew out of the stock market crash of 1929 and ensuing economic collapse known as the Great Depression. The crash was correctly blamed on the lack of regulation of Wall Street firms which were allowing … Continue reading →

By Pam Martens and Russ Martens: May 25, 2020 ~ Randal Quarles is the Vice Chairman for Supervision at the Federal Reserve Board. This is the most important position among Federal regulators when it comes to sniffing out and preventing the kind of systemic in-house bank frauds that collapsed much of Wall Street in 2008 and brought on the greatest U.S. economic downturn since the Great Depression. On November 26, 2018, Quarles was also appointed to a three-year term as Chairman of the Financial Stability Board, the international standard-setting body for financial stability around the globe. Financial stability at the largest global banks that Quarles oversees is looking less certain today than it has since the last financial crisis. Quarles is playing a key role in helping Fed Chairman Jerome Powell establish emergency lending facilities that are making trillions of dollars in revolving loans to Wall Street banks and trading … Continue reading →

By Pam Martens and Russ Martens: May 22, 2020 ~ During his appearance before the Senate Banking Committee this past Tuesday, Federal Reserve Chairman Jerome Powell told Senator Jon Tester that the Fed “has committed to disclose all of the borrowers and the amounts in a timely way.” Powell was referring to the alphabet soup of emergency bailout programs for Wall Street that the Fed has established under Section 13(3) of the Federal Reserve Act. In a statement released by the Fed on April 23, it also said this on the subject of transparency: “…the Board will report substantial amounts of information on a monthly basis for the liquidity and lending facilities using Coronavirus Aid, Relief, and Economic Security, or CARES, Act funding, including the: Names and details of participants in each facility; Amounts borrowed and interest rate charged…The Board will publish reports on its CARES Act 13(3) facilities on … Continue reading →