Wall Street Mega Banks Have Drawn a Law-Free Zone Around Themselves – The Media Is Complicit

[Gunnar Larson]

https://wallstreetonparade.com/2024/03/wall-street-mega-banks-have-drawn-a-law-free-zone-around-themselves-the-media-is-complicit/


By Pam Martens: March 13, 2024 ~

>From revoking the American people’s right to a jury trial in matters
involving Wall Street; to brazenly thumbing their nose at anti-trust law;
to trading the stock of their own bank in the darkness of their own dark
pools; to forming their own stock exchange; to committing serial felonies
without being criminally prosecuted or having their bank charters revoked –
Wall Street mega banks have drawn a law-free zone around themselves and are
more dangerous today than they have ever been in U.S. history.

The most dangerous eras for the American people versus Wall Street mega
banks have been the late 1920s and 1930s; 2007 to 2010; and today. We know
that today is the most dangerous era because we read 12,000 pages produced
by the Senate Banking Committee of the early 1930s on the Wall Street
corruption in the late 20s and 30s; we read every government report
produced on the causes of the crash of 2008 and its aftermath, as well as
every important book on the subject; and we have personally chronicled at
Wall Street On Parade the unprecedented corruption of the Wall Street mega
banks since 2008.

One key factor stands out in our mind as to why today’s Wall Street mega
bank era is so much more corrupt and dangerous than earlier times: the
failure of mainstream media to do its job.

For the past decade, mainstream media has failed to adequately report to
the American people the activities of the Wall Street mega banks and the
insidious role of the Federal Reserve in being their secret bailout
kingpin. Consider what happened with the Fed’s so-called repo loan bailouts
in the last quarter of 2019.

On September 17, 2019 the overnight repo loan rate spiked from an average
of about 2 percent to 10 percent – signaling that one or more important
Wall Street firms were in trouble. The repo loan market is an overnight
loan market where banks, brokerage firms, mutual funds and others make
predominantly one-day loans to each other against safe collateral,
typically Treasury securities. Repo stands for “repurchase agreement.” When
firms back away from lending to each other, someone is in trouble and
spreading fear of the kind of contagion that occurred in 2008.

Because the repo market dried up, the Fed effectively became the repo loan
market on September 17, 2019. It exponentially grew the amount of emergency
repo loans it was making over the following months. And, instead of just
making the customary overnight loans, the Fed also added loans lasting for
weeks, up to 42-day loans in some cases. The dollar amounts of the Fed’s
repo loans grew to staggering levels. On October 24, 2019, we reported the
following:

“The New York Fed will now be lavishing up to $120 billion a day in cheap
overnight loans to Wall Street securities trading firms, a daily increase
of $45 billion from its previously announced $75 billion a day. In
addition, it is increasing its 14-day term loans to Wall Street, a program
which also came out of the blue in September, to $45 billion. Those term
loans since September have been occurring twice a week, meaning another $90
billion a week will be offered, bringing the total weekly offering to an
astounding $690 billion. It should be noted that if the same Wall Street
firms are getting these loans continuously rolled over, they are
effectively permanent loans. (That’s exactly what happened during the
2007-2010 Wall Street collapse: some teetering Wall Street casinos
received, individually, $2 trillion in cumulative loans that were rolled
over for two and one-half years – without the authorization or even
awareness of Congress or the American people. One bank, Citigroup, received
over $2.5 trillion in Fed loans, much of them at an interest rate below 1
percent, at a time when it was insolvent and couldn’t have obtained loans
in the open market at even high double-digit interest rates.)”

The names of the banks receiving the repo loans in 2019 remained secret
from the American people for two years. When the stunning data was finally
released by the Fed, it received a total news blackout by mainstream media.
We have never seen anything that unprecedented in our 40 years of working
on Wall Street or covering Wall Street on this website. The names of the
banks in desperate need of cash in the fourth quarter of 2019 included some
of the biggest and most iconic names on Wall Street.

The Fed’s cumulative repo loans for the fourth quarter of 2019 on a
term-adjusted basis came to $19.87 trillion, based on the data the Fed
released two years later. Just six trading units of the Wall Street mega
banks received 62 percent of the $19.87 trillion: Nomura ($3.7 trillion),
JPMorgan ($2.59 trillion), Goldman Sachs ($1.67 trillion), Barclays ($1.48
trillion), Citigroup ($1.43 trillion), and Deutsche Bank ($1.39 trillion).

Fed's Repo Loans to Largest Borrowers, Q4 2019, Adjusted for Term of Loan

Consider this news blackout involving the biggest names on Wall Street to
what occurred after the Fed bailouts of 2007 to 2010.

In response to the financial crisis of 2008, the Fed stepped in with an
alphabet soup of emergency lending programs, as well as cranking out
discount window loans. While the Fed released general details of what the
programs were created to do, it did not release the names of the Wall
Street mega banks and their trading units that were doing the bulk of the
borrowing, or the sums borrowed by each institution.

A tenacious investigative reporter at Bloomberg News, Mark Pittman, filed a
Freedom of Information Act (FOIA) request with the Fed for the names of the
banks, the amounts borrowed and the terms. Under the law, the Fed had to
respond in 20 business days. The Fed stalled Pittman for six months,
leading to the parent of Bloomberg News, Bloomberg LP, filing a lawsuit
against the Fed in November 2008. Bloomberg won that suit. The Fed then
appealed to the Second Circuit Appellate Court in 2009, attempting to
continue to keep the details secret from the American people.

What is particularly noteworthy about that appellate case is that the very
same media outlets that drew a dark curtain around the Fed’s revelations of
the names of the banks taking its massive repo loans of 2019 filed an
Amicus Curiae (Friend of the Court) brief in Bloomberg’s appellate case in
2009. Those news outlets included Dow Jones & Company, Inc. (owner of the
Wall Street Journal and MarketWatch), Reuters, Associated Press, and the
New York Times.

The Amicus writers told the appellate court this: “The public interest in
disclosure in this case could hardly be greater. The [Federal Reserve]
Board has lent out more than $2 trillion under the lending programs
documented in the Remaining Term Reports. Despite this massive outlay, the
public knows little about who has received these funds or the terms of
their loans…While the Board releases aggregate data…it refuses to reveal
any transaction-level data identifying where money has gone. Without this
information, it is impossible to monitor the Board’s actions, and FOIA’s
core purpose is defeated.”

Let this sink in for a few moments. In 2019, just 11 years after the worst
financial crisis since the Great Depression, the same mega banks on Wall
Street are running amok again and back at the trough demanding trillions of
dollars in cheap loans from the Fed – despite no apparent financial crisis
in the general economy – and mainstream media does not go to court to
demand the information and then, uniformly, blacks out the details to the
American people when the data is finally reported by the Fed.

The Fed lost on the Bloomberg case at the Second Circuit Appellate Court.
The Fed was too embarrassed to take the case to the U.S. Supreme Court,
because President Obama’s acting Solicitor General, Neal Katyal, planned to
file a brief contrary to the Fed’s position, so a group called The Clearing
House Association LLC, made up of some of the very same mega banks that
were being bailed out by the Fed, filed their own appeal with the Supreme
Court. The Supreme Court declined to hear the case in March of 2011,
leaving the decision of the Second Circuit Appellate Court in place and
making way for the release of the data.

The Dodd-Frank financial reform legislation of 2010 had forced the Fed to
release the transaction details of its seven emergency lending facilities
in December of 2010. When the Supreme Court declined to hear the court
case, the discount window transactions were released in March 2011. When
the various data was released, it was widely covered by mainstream media.

On March 21, 2011, Bloomberg News Editor in Chief Matthew Winkler released
this statement:

“At some point long before the credit markets seized up in 2007, financial
markets collapsed and the economy plunged into the worst recession since
the 1930s, the Federal Reserve forgot that it is the central bank for the
people of the United States and not a private academy where decisions of
great importance may be withheld from public scrutiny. As only Congress has
the constitutional power to coin money, Congress delegates that power to
the Fed and the Fed must be accountable to Congress, especially in
disclosing what it does with the people’s money.”
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