The false impression of calm this created gave confidence to the stock market, which proceeded to set record highs, as investors were blissfully unaware (along with Congress and the mainstream business media) that the New York Fed continued to feed the Wall Street beast.
By Pam Martens and Russ Martens of Wall Street on Parade.
The U.S. Senate Banking Committee, the House Financial Services Committee, and the U.S. mainstream business media now thoroughly qualify as the dumb tourists snapping photos of the raging bull statue on Wall Street as the Wall Street banks loot the country for the second time in a decade.
Last Thursday the Financial Stability Oversight Council (pronounced F-SOC) released its 2020 Annual Report. Those tend to be tediously boring reports that tell one nothing meaningful about the true state of the Wall Street mega banks, so we just got around to perusing the document yesterday. Mixed in with the typical snooze-worthy minutiae was a bombshell that made us sit up straight in our chair. Those cumulative repo loans totaling more than $9 trillion to the trading houses on Wall Street that the Fed had been making from September 17 of 2019 – months before the onset of COVID-19 anywhere in the world – didn’t actually stop in July as the daily data from the Fed made it seem. The New York Fed simply went dark and stopped reporting how many billions of dollars a week it was funneling to miscreant mega banks on Wall Street as food pantry lines grew by miles across the U.S. and 3.3 million small businesses were forced to shutter.
F-SOC was created as an agency under the Treasury Department when the toothless Dodd-Frank financial reform legislation was passed in 2010. Each major federal regulator of banks sits on F-SOC with the Treasury Secretary acting as the permanent Chair. F-SOC defines its mission as follows: “The Council is charged with identifying risks to the financial stability of the United States; promoting market discipline; and responding to emerging risks to the stability of the United States’ financial system.”
As for F-SOC “promoting market discipline” – this is the second time in a decade that the Federal Reserve has pumped trillions of dollars into the Wall Street mega banks without any oversight from Congress. The last time around, from 2007 to 2010, the Fed secretly pumped $29 trillion in cumulative loans to bail out the hubris of Wall Street’s obscenely paid CEOs and traders. (The audit of the Fed’s secret loans by the Government Accountability Office (GAO) reported $16.1 trillion, but it omitted several Fed bailout programs.)
Before the Fed went dark this time around on its repo loans, we had tallied up more than $9 trillion in cumulative loans by March of this year. The New York Fed was reporting these repo loans daily on a page of its website from September 2019 through early July of this year. Then it began to report zeros on a daily basis for the amount of the repo loans, giving the obvious impression to reporters and market watchers that the markets had stabilized and the banks were in fine shape.
Now we find out from F-SOC’s Annual Report that these repo loans never did stop…