War is peace
Senate Banking Committee.
House Financial Services Committee.
Since the Global Financial Crisis (GFC), these hearings provide an allotted time for members of Congress to audition for a spot in MSM’s movie. To make the cut requires much rehearsal of script provided to them followed by a stellar performance of the provided to them in a manner which portrays a tense exchange between both parties. Landing a spot in this Drama-Thriller can help boost the career of a young politician.
Elizabeth Warren has had great success on this stage throughout her career. Although, she is one of the better members of Congress, asking earnest and intelligent questions, usually. Despite the amount of times her name may appear, this article is not specifically meant to focus on Warren, it is about her and the like-minded individuals of Congress portraying themselves as enemies of Wall Street when in fact they’ve only helped the largest financial institutions. It’s to prevent the false narratives occurring after every hearing, as if they’re fighting for the people. If they are, they’ve failed spectacularly.
Here are the search results on YouTube for “Senate Banking Committee” and “Financial Services Committee”:
These clips convey to Americans that Congress is in a constant battle with Wall Street; they’re fighting a financial sector that has continued to engage in dangerous practices and criminal activities; most of all they, just like you, want to prevent the big banks and hedge funds from ruining our economy, getting bailed out, and walking away back on top yet again. It’s not true. This lengthy report that you will read to completion due to its immediate and apparent impact that changes a leisurely reading into a sense of duty for all of mankind is presented in three parts. Thank you to those who recognize its importance and have rescheduled or canceled your children’s birthday party, weddings, church, or whatever lesser event it is you had planned.
Warren Sees a BlackRock And Wants It Painted Black
I, Ben Bernanke, read an article by Wallstreetonparade.com (bookmark recommended) which led to the idea for this month’s main topic of the Federal Reserve Newsletter(FRN). I’ve included the article in full as I’ll reference it throughout the Newsletter.
It begins…
By Pam Martens and Russ Martens: March 25, 2021 ~
Senator Elizabeth Warren Speaking at Senate Banking Hearing, March 24, 2021
Yesterday, during a Senate Banking hearing with witnesses Fed Chair Jerome Powell and Treasury Secretary Janet Yellen, Senator Elizabeth Warren grilled Yellen on why BlackRock wasn’t being investigated for posing a systemic risk to the U.S. financial system. Warren stated:
“BlackRock is the world’s largest asset management firm, overseeing nearly $9 trillion in assets. That’s more than double where it was 10 years ago. It also holds a stake in just about every company listed on the S&P 500. To put that in perspective, Blackrock manages more assets than the entire GDP of Japan, or Germany, or Great Britain or any other nation in the world, except the United States and China
Here’s the exchange between Warren and Yellen:
Beginning with Warren Yellen….
Elizabeth Warren is a staunch critic of Wall Street and she is usually the person of focus at the Senate Banking Committee. Warren is one of the more astute members on the left regarding financial markets, so her questions either provide insights into issues Congress will address in the near future, or if they’re fabricating a story for political reasons. Having been snubbed by Yellen for Treasury Secretary, the Banking Committee Queen was out to prove herself and chose a question that’d convey she is tougher on Wall Street regulation and would’ve been a better choice for Secretary of the Treasury.
Warren believes that the designation (SIFI: allows the Federal Reserve greater oversight) will provide another layer of protection for our economy and taxpayer. whether BlackRock poses systemic risk to our financial system is of little importance. The systemic risk is in the misplaced trust and respect in the Federal Reserve and its members. The last few decades have proved their abilities to be lacking and actions to be grossly negligent and even outright corrupt. So what good is Fed oversight?
Another concern, one that Warren and friends pretend doesn’t exist, is the relationship between Wall Street and the Federal Reserve. These regulations and committees do more harm than good and provide a false sense of security. No matter how poor the regulators perform, or severity of the crisis, there will never be a solution when each party is vested in maintaining the current structure.
The two images below capture the entirety of our problem and Warren’s “solutions.”
Wallstreetonparade.com article continued.…..
BlackRock may, indeed, pose a systemic risk to the U.S. financial system but it’s not because it holds a stake in just about every company listed on the S&P 500. It’s because it produces Exchange Traded Funds (ETFs) which promise intraday liquidity for buyers and sellers, which clearly is not the case during a market panic. During the market panic over the pandemic last year, the Fed gave a no-bid contract to BlackRock to manage its corporate bond buying programs, which included allowing BlackRock to bail out its own junk bond and investment grade bond ETFs that were tanking. (See Icahn Called BlackRock “An Extremely Dangerous Company”; the Fed Has Chosen It to Manage Its Corporate Bond Bailout Programs.)
Even the revolving door between Wall Street and the Fed is not enough. As WSOP mentions, the NYFed awarded no-bid contracts to BlackRock for the emergency facilities used in response to Covid. One fabulous benefit of these actions by our Central Bank are the records the Fed is required to provide the public thanks to Congress.
Well, they’re required to provide Congress details about the facilities–senate banking committee and house financial services. Well, they’re required to do so unless the Fed decides a delayal is necessary for the good of us all.
Look, it’s complicated. Anyhow.
Thankfully, Jerome Powell is a man of transparency and the emergency facilities funded by the Cares Act released their transactions each month.
The Fed has worked with BlackRock on both occasions where they’ve instituted “monetary policy” measures of a failed system. And on both occasions BlackRock is a beneficiary of these measures(No-Bid contract(s)). Because of our senators’ interest in BlackRock, let’s review the Fed’s relationship and bidness(get it?..no) with BlackRock.
The Executive agencies of the Federal Government have to abide by the Federal Acquisition Regulations (FAR), a complex set of rules governing the federal government’s purchasing process—usually this requires an agency to conduct a bidding process. These rules help ensure the government receives a fair price and they do not discriminate against businesses or pick favorites. Unfortunately, these regulations do not apply to the Federal Reserve Banks. Once again, the Fed may create their own standards and they’re able to choose their preferable institution—the Fed’s structure benefits them well. The image below is of the New York Feds’ Vendor fees. PIMCO and BlackRock are the two highest paid companies and they awarded both “No-Bid Contracts.”
Before the vendor fees were updated to reflect Q4, I started to believe that Blackrock may be providing this service for free. I thought maybe a sudden simultaneously delayed realization of helping the American people through these tough times was enough payment for BlackRock….
My quoted tweet shows the vendor fees before the last update – no payments to BlackRock. For whatever reason, it took the NYFED almost two months to update the last quarter(it appears to be the norm with NYFED). The Corporate Credit Facilities(PMCCF + SMCCF) are managed by BlackRock, but only the Secondary Market Corporate Credit Facility was operational. According to the image above, in November BlackRock received 4.19 million dollars for the PMCCF that wasn’t operational and 1.77 million for the SMCCF that was operational – why?
Each Emergency Facility provides the details of earnings and pay schedule for the Investment Management Agreement. The original fee structure(IMA)–if my memory serves correctly, and it usually does not–(it’s a different company) was a percentage of AUM.
When Powell announced the CCF’S, it was expected they’d conduct hundreds of billions of asset purchases since the Fed stated, “up to 750 Billion”. It must’ve been a letdown for BlackRock to discover that only the SMCCF would operate and purchase such a paltry sum of 14 billion in assets. Mr. Finks BlackRock ain’t gonna be played like that and something was to be done about this egregious pay structure. Thankfully, the “companies” have poor representation (NYFED) and its agreements are generous for the other party. If a manager (Blackrock) is unsatisfied with their pay structure, the one agreed upon and presumably thought would reward their services above the industry standard since, after all, no competitive bidding process, the manager simply amends the fee structure and everybody moves forward. And that’s what they decided to do for the PMCCF:
The Investment Management Agreement was amended months after their start date. A fixed fee was added and AUM was modified to include assets under the SMCCF. The fixed fee just so happens to dramatically decline at the end of BlackRocks management period. Of course, this would make sense if the facility conducted purchases through December 31 and only required servicing thereafter. That’s not what happened. I’m guessing the most labor required of BlackRock for the PMCCF was literally adjusting their IMA to compensate for wasted time.
It’s only 4 million dollars. Big whoop. The reason it’s a big whoop, Jessica, has nothing to do with the amount and everything to do with how the NYFED operates. It’s the fact we entrust oversight of Wall Street to the Federal Reserve. It’s the fact Warren and others who advocate for increased regulations/oversight through the same mediums proven to fail time after time again are either incompetent or complicit.
To really hammer this insignificant point home, one more review of the vendor fees is required. Each facility has an Investment Manager so why not compare their pay…
CPFF – PIMCO: The fees paid for this facility totalled more than BlackRocks but for reasons which make sense. As each agreement states, fees are to be paid quarterly(assuming the manager provides an invoice), and PIMCO has two fees that are 3 months apart(Quarterly). The major difference is the CPFF is operational. Therefore, managing of investments was done.
MLF – Mellon: The facility made 4 loans. Mellon has charged an impressively low management rate of $1.25 per loan billed quarterly–Yet another thing in need of investigation. Apparently 4 loans cost less to manage than 0.
TALF – PIMCO: Same story as the CPFF.
Part 3 has interesting details about this facilities’ transactions.
So the only facility that wasn’t operational incurred the greatest one time fee for its Investment Management.
When the Corporate Credit facilities asset purchases came to an end, so did BlackRocks contract…
The decision must’ve saddened BlackRock. Or… Perhaps BlackRock didn’t want to continue managing a facility no longer purchasing assets because they’d no longer be able to adjust their fees nor have inside information about Fed purchases and policy. However, that is just “speculation.”
That’s in the past.
Let’s move forward to the Emergency Facilities used during the Global Financial Crisis.
Would you like to guess which company was awarded the most no-bid contracts and paid the greatest amount of fees? Yes.
From a few millions to hundreds!
Four of the five contracts awarded to BlackRock were not by a competitive bid process. Maiden Lane Facilities (3) and Citigroup Lending Commitment compromised the bulk of the $200 Million dollars in fees collected. The Federal Reserve awarded 103 contracts at a total cost of 659 million dollars to the taxpayer (depending on who you ask). One firm was fortunate enough to represent around 30% of all vendor costs.
Summarizing all of this information before we forget how we got here….
Warren stressed the importance of Yellen and FSOC designating BlackRock a Systemically Important Financial Institution all for increased oversight by the Federal Reserve. In the last decade, the Fed chose BlackRock to manage more facilities than any other institution and paid the firm hundreds of millions of dollars.
I’d say…
END OF PART 1
Skip Part 2:
Jamie Blood Dimons’ JPMORGAN Crime spree
&
jUmp to Part 3:
Politician’S fighting Wall Street:
Fugazi?.. Fugazy?..
Starring Patrick Swayze’s
Jamie Blood Dimons’ JPMORGAN Crime Spree
Remember that article?
It continues…
Wallstreetonparade article continued
But if we’re going to seriously talk about systemic risk to the U.S. financial system we need to start at the top rung of the ladder. That’s JPMorgan Chase. According to the Office of the Comptroller of the Currency, the regulator of national banks, JPMorgan Chase “maintains one of the world’s largest and most complex fiduciary businesses with total fiduciary and related assets of $29.1 trillion, including $1.3 trillion in fiduciary assets and $27.8 trillion of non-fiduciary custody assets.”
Not to put too fine a point on it, but $29.1 trillion is 5.8 times the $5 trillion GDP of Japan in 2020 while BlackRock’s assets are just 1.8 times Japan’s GDP in 2020. In addition, BlackRock has never been charged with a felony by the U.S. Department of Justice. JPMorgan Chase has been charged with five felony counts by the Department of Justice in the last seven years and admitted to all of them. Making it appear that felonious behavior is a feature, not a bug, at JPMorgan Chase is the fact that its Board of Directors has seen fit to keep Jamie Dimon as its Chairman and CEO throughout this unimaginable crime spree at the largest federally-insured bank in the United States. The Board has also very generously compensated Dimon. (See Jamie Dimon Gets $31.5 Million Pay Despite Bank’s Criminal Charges as U.S. Slides Below Uruguay on Corruption Index.)
I’ll try to keep this part about JPMorgan and the largest financial institutions brief. You still have quite a lot of reading to do. It’s important to review how effective our regulators are at providing oversight of the institutions involved in creating the Financial Crisis because Warren, and like-minded members of Congress, adamantly fight to expand their reach. This appears as if they’re trying to combat Wall Street, and maybe they believe they are, but how effective is it?
WSOP mentions a few crimes of JPMorgan because it’s not practical to share the details without creating an hour long read… Like I do.
Look, you think I enjoy turning a 5 minute article into a read that takes the entire day? Imagine how long I take. Weeks. The worst part is apparently numbers like 29,000,000,000,000 aren’t big enough for Americans to question the Fed, nor the constant crime spree by Wall Street the Feds all important oversight is supposed to prevent, and it doesn’t help that I’m barely sleeping because I fear my own dreams, my God damn cat has a Urinary Tract Infection and has apparently made lemons into lemonade by creating a game out of her health issue which involves looking me in the eye every time she pisses on my clothes, and as I run to prevent this act of war she escapes my fury by making use of her small stature and strategical use of structures in my room, and all of these back to back to back victories embolden her arrogance as I’m unable to provide the only form of discipline this woman has ever responded to, the back of my hand, so once again I sit atop me bed and she under the bed, patiently awaiting the next round, which she determines, and in between these periods I ponder whether to rearrange my room in a fashion disadvantageous to the feline, but who wants to spend an entire day rearranging a room just to go toe to paw with your friend?
— I believe it necessary to interject a note so my reader is aware that a decade ago the cat was purchased by my mother and she thought it necessary to cut off the fingertips(claws) of my best friend, an atrocious act which led to a dramatic shift in the meaning of mom to me and all just to protect her “expensive” furniture…. Expensive to who? Not the Fed according to their latest financial statements:
Is it Fed Furniture expensive? No… SO WHY ARE WE CUTTING FINGERS OFF? There’s no easy way to come to grips with the fact your mother has Patrick Bateman like tendencies. I mention this because I’m not trying to portray that I’d actually threaten a cat with claws and I’m some bad ass fighter of Tigers.
Continuing the contemplation….
but if I decide to move forward with this operation, it’s a huge risk because, let’s face it, any specimen of the cat family is an incredible creature, and while she may strut around the house with her belly almost dragging on the floor, during moments of catdrenaline they seem to consistently achieve amazing feats such as defeating physics, and so really the only viable solution, one could say final solution… I wouldn’t say that but some people may say that.. is to place multiple vacuums around the room, but nobody wants multiple vacuums in their room, although they do if the alternative is spontaneous puddles of cat urine, so I’ve ordered 5 vacuums. Now that I am typing this aloud, it appears UTI’s heal quicker than what my friend told me 15 years ago. Unfortunately, the vacuums come from South Korea and their customer service line doesnt seem to be operational. They are getting paid though. Anybody need a vacuum? Cheddar052090@gmail.com
Anyhow… We’re walking… Where were we walki… Oh yes, JPM.
The biggest US Bank has been involved in rigging every major market, along with a slew of other mischief that is apparently day to day activity, and all within a decade after the Financial Crisis.
LIBOR: London Interbank offered rate – underpins +400 trillion of assets.
How is Libor, a rate that affects the borrowing costs of everything, determined?
Intercontinental Exchange(ICE) asks bank 1, “where do you want LIBOR at?”, Bank 1 then responds,”I want it [insert pre-determined number by bank 1 and other banks it conspires with to arrive at a rate that benefits their practices]. Repeat 17 times. ICE averages these submissions = LIBOR.
Real life.
Treasury market: casually rigging the debt/funding market of the most powerful country in the world is only fair because of LIBOR. Even Stevens.
Fannie and Freddie: +60% of all US mortgages are bought by Fannie and Freddie, the institutions that are apparently not apart of the government until they need 100s of billions of dollars (low end of the range), when they are placed into conservatorship by the U.S. Treasury for a decade, and now prepare to release conservatorship just in time for them to create another opportunity for their next bailout. Gotta respect the business model.
FOREX: who doesn’t?
Municipal/State: JPMorgan and other major banks coordinated expenses to be reimbursed by multiple issuers within California that had no relation to underwriting. The Securities and Exchange Commission found that the firms made payments to their California lobbying group between January 2006 and December 2010. Then the firms turned around and asked the state and other municipal bond issuers to reimburse them for the voluntary lobbying payments, masked as expenses for helping the governments sell their bonds.
Derivatives: every type that exists.
Precious Metals: Gold, silver, copper, aluminum, and more….JPM was estimated to own over 50% of the entire aluminum market. The images below are from a case file on justice.gov about JPMorgans rigging of precious metals.
Traders continue to leave a footprint by messaging other employees about their criminal activity, occasionally providing details by the minute. Leading up to the financial crisis, Goldman Sachs traders sent messages about their activities in the MBS market, which ended up as the center of many stories by the media and politicians. If regulators were reliable, how is it possible for one institution to consistently break the law and risk billions of customer deposits? How is it traders are so comfortable exchanging messages revealing their massive fraud? These are the illegal actions of ONE BANK and I’ve hardly provided a thorough summarization. Of course, nobody knows how many illegal activities JPMorgan has been able to get away with.
There are more details to be detailed about the Fed’s questionable arrangements with Wall Street. Bettermarkets.com provides an in depth examination of the last 20 years…
STILL CONTINUING THIS ARTICLE…
During the 2008 Wall Street crash, Americans learned the meaning of “too big to fail” when it came to mega banks on Wall Street holding federally-insured deposits while also being allowed by their regulators to run trading casinos in stocks, subprime debt, commodities and derivatives. The banks and the foreign counterparties to their derivative trades were bailed out – to the cumulative tune of $29 trillion in secret loans(See GFC Lending) made by the Fed from at least December 1, 2007 through July 21, 2010.In the next crash on Wall Street – which is only a matter of when, not if – the American people will finally grasp that the Dodd-Frank financial “reform” legislation of 2010 did nothing meaningful to actually reform Wall Street. It simply allowed these mega banks to grow even bigger and more systemically connected to one another, creating a domino effect of failures when one of the mega banks becomes insolvent.
In 2016 researchers at the U.S. Treasury’s Office of Financial Research (OFR), Jill Cetina, Mark Paddrik and Sriram Rajan, meticulously spelled out for federal regulators and the general public the potential for contagion and systemic counterparty risks building up inside these Wall Street banks. The report found that the Fed’s stress tests were not capturing the real risk on Wall Street. According to the researchers, the critical issue is not what would happen if the largest counterparty to a specific bank failed but what would happen if that counterparty happened to be the counterparty to other systemically important Wall Street banks.
If you’re curious about the severity of counter party(CP) risk, the OCC Quarterly Report on Bank Trading and Derivatives Activities is for you! Dodd-Frank attempts to mitigate CP risk by requiring Central Clearing of Derivative Contracts – AIG 2008. Derivative holdings of the top 4 banks are just under 145 Trillion. All of the other banks combined hold 18 trillion.
One might assume that a market of this size would be heavily regulated. However, the truth is nobody could really tell you about the potential risk from each bank or party because a majority of the trades are in the dark!
Dodd-Frank intended to curb counter party risk of interest rate swaps after the GFC by reducing OTC trades. In 2015, banks responded to Dodd-Frank regulations by moving their operations abroad.
This won’t cause members of Congress to question regulation. It certainly won’t impact the average American’s view nor their support for greater regulation and government “control” of Wall Street. Ironically, the systemic risk concerning Elizabeth Warren, and the gang of politicians “fighting” Wall Street, exists as a result of her actions and the decades of members dancing to the same beat whilst unknowingly(or knowingly but who knows) mothering the one institution able to create such a monstrosity of a financial system.
It doesn’t take a history lesson to prove both parties will never be able to control Wall Street. It shouldn’t require another intervention by the Fed of 29,000,000,000,000 to figure out our Central Bank protects and feeds Wall Street. The past year has provided enough examples to prove beyond a reasonable doubt they’ve not a clue, or worse, they’re worse than the worst you thought.
After the Global Financial Crisis, Congress passed sweeping reform of Wall Street… according to Congress and MSM. Words of NBC: “Senate passes sweeping Wall Street reform: Congress passed the stiffest restrictions on banks and Wall Street since the Great Depression.” Wow! Then why do the actions of Wall Street since the GFC so obviously metaphorically tell us “we don’t give a shit.”
Perhaps Elizabeth came upon the truth awhile ago and realized these petty attempts are the only option besides doing nothing. Realistically, attempting to change the structure of our financial system is impossible—monetary policy independency was used to create dependency.
Fugazi
In this part I’ll be discussing the House Committee on Financial Services and Senate Banking, Housing, and Urban Affairs hearings….. Which took place in December. Yet again politicians convey a battle wherein they’re defenders of the average American, and their enemy is the rich responsible for their struggles, which coincidentally creates support for expanding the role of Congress and the Federal Government. All it takes is one example to see that the blame Wall Street narrative used by politicians is all an act—context for the silly title and image.
Here’s a brief breakdown of the events(full hearing here) which took place:
• Mnuchin sends letter to Powell informing him that 5 emergency facilities will end December 31st and contributions provided by the Treasury shall be returned —
A note about this: The Treasury and every article by the NYT, CNN, etc suggests the Fed was returning 454 billion dollars to the Treasury. In fact, Mnuchin was holding onto the majority of the funds he requested (Treasuries ESF “Statement of Financial Position” below)
• The facilities extended and ended were determined by the Cares Act and not Mnuchin. The facilities could not be extended because the law specified that the ability to make new loans terminates on December 31, 2020; existing funds could be used for restructuring, modifying, or amending loans(servicing).
• One facility helped Main Street(debatable) while the others benefit Wall Street. However, members of the committee successfully managed to repeat that the facilities benefited average American’s, Mnuchin arbitrarily decided to end facilities, and then have MSM facilitate the lies about the facilities—not one source mentions the actual purpose and details of the facilities. The one facility(big fan of the word facility) “helping” Main Street only lent a few billion dollars. Ending the facilities allowed 100s of billions(unused) to be repurposed for stimulus or the Paycheck Protection Program—direct relief for Americans. In other words, Democrats fought for the Fed to keep 100’s of billions of dollars for Wall Street at the expense of main street while claiming to do the exact opposite. I went to the Google a number of times in search of someone exposing this propaganda, no such story was to be found. Although, what I have found is a motive.
HEY! Did you know the Treasury has an account with billions(at this moment it’s around 140 Billion) and the Secretary can speculate in FOREX, lending, and partake in other activities as not one person can stop them? Another interesting tidbit about our Treasury Secretary, he/she is the only person the Federal Reserve must get approval from to create Emergency Facilities.
Hey, it’s not like the Fed would create Special Purpose Vehicle’s and hire Wall Street to manage and facilitate their own bailout with 19 trillion dollars and another 10 trillion to help foreign Central banks and fight to prevent records detailing the transactions from being released.
More on that after the Patrick Swayze’s show. First, we’ll start with the respected media pundits who helped support the film.
Paul Krugman: “Mnuchin is effectively trying to create a financial crisis”
Jared Bernstein: “I’ve seen Mnuchin do this before… It’s not raining under my umbrella. Therefore, I do not need an umbrella”..[Ella.. Ella] – while quoting a tweet that states his move prevents Biden from revamping these programs—this provides the real reason they were so adamantly against this “decision.”
Also of note about Bernstein – From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, Executive Director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. He is currently President Bidens Chief Economic Advisor.
Ilan Goldenburg: “This is monstrous behavior”…. I think his last name explains why he holds that opinion. Jk. Sort of.
NYT, CNN, WAPO: “Trump and Mnuchin snubbed and sabotaged Biden.” “Why…curbing the Fed’s lending powers it’s such a big deal.”
At the Senate Banking Committee, Sherrod Brown, another prominent Congress member of Financial matters, went on a tangent similar to the ones above about Mnuchin. In this clip, Mr. Brown depicts struggling restaurant owners from his state (Ohio) who are going to be impacted by Mnuchin’s terrible, deplorable, despicable action.
Why the sarcastic remarks about Mr. Brown? Because he’s full of shit. As I’m about to detail, the only facility that would’ve helped restaurant owners or small businesses was the Main Street Lending Facility – a highly unlikely choice considering PPP loans are grants if the funds are used for payroll, rent, and a few other expenses. Thankfully, I’m here to help Mr. Browns seemingly underpaid staff, or lack thereof, which could’ve helped illuminate his states limited use of this facility.
4 loans. The entire state of Ohio has 2.2 million small businesses(under 500 employees). So Sherrod Brown used the five minutes delegated to him at the Senate Banking Committee Hearing to share a story about failing small businesses, blames Mnuchin for ending the ONE facility of Five which could possibly help, AND IT TURNS OUT .00000414% OF SMALL BUSINESSES IN OHIO HAD USED THE MSLP AT THE TIME OF THIS HEARING—Compare that to the tens of thousands of “loans”(grant) the state of Ohio received via PPP. The fuckin balls on that guy… Let it be known, Sherrod Brown of Ohio is a snake.
A thorough review of the facilities is necessary to prove these members are either Incompetent or working to protect the Wolves. It’s practically impossible to find a reasonable justification for the defense of these facilties. Therefore, it reveals that if neither party is going to curtail Wall Street, they’re certain to never curtail reckless actions by the Federal Reserve. Instead, they’ll continue these committee’s and hearings having accomplished nothing besides putting on a show to convince people otherwise,
Mr. Mnuchin appears to have extended Four of the Emergency Facilties; CPFF, PDCF, PPPLF, and MMLF were included within the Cares Act. If you peruse the Fed’s monetary policy tools, you’ll notice that 3 of the facilities’ transactions are not disclosed—these facilities protect transactions of the primary dealees/banks.
Transactions of the PPPLF only disclose the lenders and not borrower data–SBA provided info following a District court ruling. After the release, controversy ensued as people discovered celebrities, politicians, and big business received funds while small businesses continued to wait.
The Federal Reserve’s research of the PPP program confirms these advantages:
Here’s a fun fact to contemplate during your morning shower. As I previously stated, some of the facilities extended were not apart of the Cares Act. The PPPLF being one…
Now consider…
The Cares Act requires that no facility transact with a “covered-entity” or “covered-individual”; you’d think that preventing the administration, members of Congress, and their relatives from using these facilties would be standard protocol. The one facility with the greatest amount of funding, and loans which transform into gifts so long as the rules are obeyed, is the one with no conflict of interest restriction. This allowed many Congress members to receive millions Another example to help illustrate how both sides are one side and they’re against you.
Arriving at the point…
Here’s a breakdown of the facilities the left and MSM chose to adamantly defend over funding for PPP or other relief.
Emergency Facilities
Haven’t we covered this? I’m not sure by now.
PDCCF: Never Operational
SMCCF: Purchased exchange traded funds (ETF’s) and corporate bonds
Notes : At the time of the Senate Banking Hearing, the SMCCF spent 13.5 billion dollars to purchase corporate bonds, an amount substantially higher than all of the other facilities combined.
The Corporate Credit Facilities were managed by BlackRock.
MIRACLES FOR MAIN STREET: 0 — Wall Street: 1
Municipal Liquidity Facility: Two loans. 2. Dos. 1 more than 1. I’m of the opinion that one loan to the state of Illinois and New York’s MTA does not qualify as benefitting middle class Americans.
MIRACLES FOR MAIN STREET 0 — Wall Street 1
Negative 1 to the Fed for making these shitty loans which are supposed to be for municipalities unable to fund budget/raise capital and I did done checked each of these borrowers bond issuances and they’ve had no trouble. Shame!
Main Street Lending Program(Facility): Again, this facility had only extended a few billion at the time of the house financial services hearing. Although, during the last month lending soared. It was the only program to benefit the middle class or small businesses, but it’s still far from ideal, if that’s the goal. The program was meant for businesses in between the undefined small and large sized businesses–according to the SBA, a small business is one that employs 500 people or less.
I’ll let you decide.
Have you ever seen a new LA Fitness and said, “it’s nice another small business has joined our community”?
The reason I ask; the MSLP provided a small loan to LA FITNESS of 300 million dollars— a bit medium I guess. Fortunately, thereafter 300 millions was determined to be too many and loans were limited to 250 millions–this may be necessary for small businesses dependent on Lumber.
MIRACLES FOR MAIN STREET: 0.5 — Wall Street 1
TALF: Oh, what a savior this facility was for middle class Americans. Surprisingly, New York Times’ Jeanna Smialek(she is not to be trusted…usually), explains how TALF allows Financial Institutions to profit with no risk—when Jeanna and other NYT contributors wrote about Mnuchin ending the facilities, TALF was not mentioned, and the article made claims similar to the left and Krugman.
After Matt Taibbi revealed who and how the TALF was used during the GFC, one might assume the Fed would put this one to rest. They would be wrong. They didn’t even trouble themselves with implementing new rules to prevent foreign entities from being the major beneficiary; South Korea is listed as the material investor for 130 of 372 transactions.
The intent of TALF is to increase “the flow of credit to consumers.” Student loans, auto loans, and credit card debt are packaged into securities and used as collateral to provide further lending. In reality, it’s used as a vehicle for Hedge Funds and Financial Institution’s to leverage risk free trades.
Helping our friends in South Korea is part of our usual foreign aid, but helping one Hedge Fund is, at the very least, frowned upon. As of the latest transaction data, Alta Advisers is the borrower for more than +50% of all loans. Their SEC filing shows the fund was originated in the Cayman Islands and has four employees.
The Final Score…… MIRACLES FOR MAIN STREET: 0.5 — Wall Street: 2.
As a result of the Fed’s questionable actions(See GFC Lending)in response to the Financial Crisis, Congress passed legislation requiring increased oversight and transparency of the Federal Reserve, but most of their actions remain protected, insisting it’s for our nation’s security. Maybe they’re right. Despite what I believe about the Fed, granting Congress the capability to influence monetary policy would lead to a disaster:; provided that as the only option, a small group of people routinely causing economic bubbles, saving financial institutions by lending trillions, fighting to keep those actions secret is, somehow, a superior structure. Greater transparency doesn’t have to affect monetary policy – it’s a scare tactic. Unfortunately, our financial systems’ infinite need for liquidity requires undisclosed decisions, as it’s highly probable Americans would not stand for these actions.
Maybe that’s why both sides work to keep the Fed secret. As frequent as the left bashes Wall Street (Warren, Brown, and Waters being the most prominent), it was a majority of Democrats preventing a thorough “audit the fed” bill and it required Bernie Sanders caving to get a lesser version passed. The left is the party fighting for the poor and honest working American. They want to reign in Wall Street speculation and the crony capitalism that has led to bailouts of financial institutions. So they say…
When this website launched, I thought the Federal Reserve’s actions would finally break their irrelevancy(to the average American) barrier and join the mainstream media and political conversation. In April 2020, the economy prepared to close as the Covid pandemic worsened. Congress’ drastic response to the first spike in cases of Covid measures, such as “closing” the entire economy, will most likely occur multiple times due to a repeat of cases rising upon opening. If this scenario unfolded, the Fed would be forced into using all of their ammo until each monetary policy tool clicked.
A few months later, cases and deaths went far and above the earlier peak in April, yet surprise, surprise, no more shutdowns. I naively forgot that politicians are politicians no matter the circumstances. While attention on the Fed has heightened compared to years prior, it hasn’t led to a considerable difference.
The Emergency Facilities exhausted a fraction of their potential and the remaining will soon conclude. They’ll be back. They will play an instrumental role, transitioning our economy away from the private sector, and into one for-the-greater-good-centrally-managed-love-the-state-or-get-taken-away-in-a-van paradise.
It’s occurring right now–
• In the first 6 months of the 2021 FY, the budget deficit was 1.7 Trillion.
• In the 1Q of 2021, spending on transfer receipts soared to an annualized rate of 8 Trillion Dollars. These payments made up 33% of Total Income.
• The Small Business Administration has gifted businesses 250 Billion through the PPP this year and 750 Billion Dollars(rounding) since April of 2020. According to the Federal Reserve(FEDS working paper), each job saved by the PPP cost $43,000. Having consulted a friend in advanced maths or what not, I can safely say that 1Q PPP loans funded 5.8 million jobs(250 Billion/43,000.. Never trust my mathematica’s).
•2021 Federal aid to States +350 billion dollars
•Federal Student loans (1.5 trillion) have been deferred until October(They’ll be forgiven during Biden’s first term)
•Rent moratorium and Mortgage forbearance (recently dropped to 4.2% of homeowners) help stimulate demand and prevent foreclosures.
We really need to get moving so you can get back to your life… ..
Look, you imbecile, the Federal Government is controlling or heavily influencing every major market and cannot end support without crashing the economy. However, the absurd amounts of spending will continue to propel record economic growth, and for a brief period, foolinvestors and markets. This is assuming most of the spending and other relief measures are not extended. If they do, it will take little time for their return.
Congress, the Fed, and all of our other Shepherds are aware of the structural economic problems within our economy. Wealth Inequality is being leveraged for political motivations to justify higher taxes on the rich and increased benefits for middle and lower income. However, the truth is the tax will be avoided by the ultra rich and Wall Street, while the small to mid-sized businesses will get crushed. The benefits for everybody else are for two reasons. The first reason is our economy and system can only stay afloat if transfer payments continue indefinitely. The next reason is to increase your dependency on the government and their role.
These policies are portrayed as benefitting average Americans, just like the emergency facilties, they’re going to do the opposite.
This may explain why the left was so adamant in defending the Emergency Facilties. When Steve Mnuchin made the “decision” to end the facilities, the funds were supposed to be returned to the Treasury General Account. This would require Congress to pass new legislation for the Treasury to use the funds for Emergency Facilties. Since Joe Biden won the election, they were attempting to keep the funds under control of the new Treasury Secretary, Janet Yellen. As I mentioned earlier, the Secretary has a fund no government official or employee can review—Exchange Stabilization Fund.
The Funding by Congress is not necessary for the Federal Reserve to create Emergency Facilities. If losses occurred, the taxpayer would foot the cost of the initial bad investments. Taking this into consideration, it is apparent that their intent was to provide Yellen the ability to fund emergency facilities if the economy struggled in the future. Again, the Federal Reserve only needs approval by one person to create emergency facilities—Janet Yellen.
Section 13(3) of the Federal Reserve Act:
The Board may not establish any program or facility under this paragraph without the prior approval of the Secretary of the Treasury.
The Treasury is essentially an extension of the Federal Reserve now and vice versa. There’s a reason Janet Yellen is making her way around the media more than the President. The Fed and the Treasury will work together to “help” the economy as the private sector economy struggles and all due to their policies.
In the next Federal Reserve Newsletter, I’ll discuss how the Fed, Treasury, and Congress are “Printing Black Swans.” Enjoy the economic “boom”, because after this short growth period the only boom occurring is in the volatility of prices.
Of course, all of the Patrick Swayze’s will be on the TV claiming how they’re going to save us again.
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