Congressman Andy Barr Stacks a Hearing on the Fed’s Stress Tests with Lobbyists for Megabanks
Congressman Andy Barr Stacks a Hearing on the Fed’s Stress Tests with Lobbyists for Megabanks
ByPam Martens and Russ Martens: June 27, 2024 ~ Yesterday the House Financial Institutions and Monetary Policy Subcommittee held a hearing titled “Stress Testing: What’s Inside the Black Box?” The hearing was convened to examine the manner in which the Federal Reserve conducts its stress tests of the megabanks. The witnesses called to testify included the following: an employee of the Financial Services Forum, a registered lobbyist for banks; an employee of the Bank Policy Institute, a registered lobbyist for banks; Jonathan Gould, a lawyer from Jones Day, whose clients are banks; and one lonely soul, Greg Feldberg, Research Director of the Yale Program on Financial Stability, who was the only credible voice on the witness panel. The Chair of this Subcommittee is Andy Barr, a Republican from Kentucky whose largest four campaign donors are the following: employees of the Wall Street private equity firms Apollo Global Management and Blackstone … Continue reading →
The Fed Posts Historic Operating Losses As It Pays Out 5.40 Percent Interest to Banks
The Fed Posts Historic Operating Losses As It Pays Out 5.40 Percent Interest to Banks
ByPam Martens and Russ Martens: June 26, 2024 ~ According to Federal Reserve data, for the first time in its history, the Fed has been losing money on a consistent monthly basis since September 28, 2022. As of the last reporting date of June 19, 2024, those losses add up to a cumulative $176 billion. As the chart above using Fed data shows, the losses thus far in 2024 have ranged from a monthly high of $11.076 billion in February to a low of $5.674 billion in May. These losses are separate and distinct from the unrealized losses the Fed is experiencing on the debt securities it holds on its balance sheet. It does not mark those losses to market since it intends to hold the securities to maturity and their principal is guaranteed at maturity by the U.S. government. The losses shown in the above chart are actual cash … Continue reading →
Goldman Sachs’ Bank Derivatives Have Grown from $40 Trillion to $54 Trillion in Five Years; So How Did Its Credit Exposure Improve by 200 Percent?
ByPam Martens and Russ Martens: June 25, 2024 ~ Last Friday, Goldman Sachs Bank USA, the federally-insured, U.S. taxpayer-backstopped commercial bank that the international trading behemoth, Goldman Sachs Group, is allowed to operate, got a smackdown from two of its regulators, the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board (the Fed). The two regulators released a letter they had sent to David Solomon, Chairman and CEO of Goldman Sachs Group, which revealed that the commercial bank had flunked its wind-down test known as its “living will.” Derivatives were specifically cited for the “shortcomings.” Of particular note, the regulators wrote that Goldman Sachs Bank USA “…did not demonstrate the ability to model its derivatives portfolio unwind by counterparty for segmenting the portfolio in resolution. In the [upcoming] 2025 Plan, the Covered Company should demonstrate the ability to view derivatives positions at a counterparty level within both the portfolio … Continue reading →
The Fed and FDIC Wake Up Suddenly to the Threat of Derivatives, Flunking the Four Largest Derivative Banks on their Wind-Down Plans
ByPam Martens and Russ Martens: June 24, 2024 ~ Since the financial crash of 2008 and the Fed’s multi-trillion dollar bank bailouts that followed, the Office of the Comptroller of the Currency (OCC) has been waving a giant red flag every quarter in its “Bank Trading and Derivatives Activities” reports. For sixteen years the OCC has been reporting that just four megabanks are responsible for more than 80 percent of the trillions of dollars in bank derivatives. As the chart above shows, 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 U.S. banks, savings associations and trust companies. That’s four banks holding 87 percent of all derivatives at all 4,587 federally-insured institutions in the U.S. that existed as of December 31, 2023. … Continue reading →
