The New York Times needs to come clean and issue a full apology and explanation to the public about its inaccurate reporting and damage control efforts for Wall Street banks.
By Pam Martens and Russ Martens of Wall Street on Parade.
Last Friday, the New York Times officially embarked on what we have been expecting – an attempt to rewrite the current, ongoing Wall Street bank bailout. We were so certain that an alternative reality was going to emerge at the Times, that we had the foresight to create an archive of Wall Street On Parade articles (122 so far) that document every major bailout step the Fed has taken since September 17, 2019 – five months before the first COVID-19 death was reported in the United States.
One of our articles, published on January 6, 2020, shows that before the first COVID-19 case had even been reported in the U.S., the Fed had pumped more than $6 trillion cumulatively into the trading units of the largest Wall Street banks — not hedge funds, that the Times now attempts to blame for the crisis.
Before we delve into the latest propaganda war for Wall Street by the New York Times, you need a bit of background.
On May 12, 2012 Andrew Ross Sorkin of the New York Times wrote one of the most factually-challenged articles we have ever read by a business writer in the U.S. Sorkin attempted to rewrite the 2008 financial crisis and knock down efforts at the time by Senator Elizabeth Warren to restore the Glass-Steagall Act.
The 1933 Glass-Steagall Act was passed by Congress at the height of the Wall Street collapse that began with the 1929 stock market crash that ushered in the Great Depression. The legislation tackled two equally critical tasks. It created Federally-insured deposits at commercial banks to restore the public’s confidence in the U.S. banking system and it barred these commercial banks from being part of a Wall Street investment bank or securities underwriting operation because of the potential for speculative trading to render the taxpayer-supported bank insolvent.
The Glass-Steagall legislation protected the U.S. banking system for 66 years until its repeal under the Bill Clinton administration in 1999. It took only nine years after its repeal for the U.S. financial system to crash in a replay of 1929, requiring the largest banking bailout in history.
To make his case in the 2012 article, Sorkin writes that Lehman Brothers owned no commercial banks at the time of its collapse. In fact, Lehman Brothers owned two FDIC insured banks, Lehman Brothers Bank, FSB and Lehman Brothers Commercial Bank. Together, they held $17.2 billion in assets as of June 30, 2008, less than three months before Lehman Brothers filed bankruptcy on September 15, with more than 900,000 derivative contracts.
Next, Sorkin says that investment bank, Merrill Lynch, had nothing to do with Glass-Steagall. In fact, Merrill Lynch also owned three FDIC insured banks in 2008, which would not have been allowed under the Glass-Steagall Act. Merrill was such a basket case that the Federal Reserve had to secretly pump $2 trillion cumulatively in loans into the firm to keep it afloat until its purchase by Bank of America, according to an audit done by the Government Accountability Office.
Next Sorkin asserts in the article that Citigroup – the poster child for the evils unleashed by the repeal of the Glass-Steagall Act – didn’t begin to experience its problems until “all hell was breaking loose” on the cusp of the fall of Lehman, AIG, Fannie Mae and Freddie Mac, all of which occurred in September 2008.
That is simply a blatantly false and preposterous statement that flies in the face of a mountain of facts to the contrary. Citigroup began receiving emergency funding from the Fed in December 2007…