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:
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.
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.
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.
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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