Courtesy of Pam Martens
Congresswoman Maxine Waters
Yesterday, Congresswoman Maxine Waters of California, the Chair of the House Financial Services Committee, released the titles of the hearings she plans to hold during the month of March. Of the hearings held by this Committee in February, none addressed the systemic risk to the U.S. economy from the interconnected mega banks on Wall Street. According to the hearing list released yesterday for the month of March, systemic risks at the mega banks has again gone missing. The only mega bank to be grilled in March will be Wells Fargo, and that will focus on its “pattern of consumer abuses.”
This lack of attention to the most dangerous, interconnected mega banks on Wall Street – JPMorgan Chase, Citigroup, Goldman Sachs, Bank of America and Morgan Stanley – by the newly installed Democratic Chair of the House Financial Services Committee does not bode well for the Democrats – or for the financial health of the country. It was just a decade ago that those same banks and that same systemic risk created the largest economic crash in the United States since the Great Depression. And the same fault lines of that era are still with us today.
Waters’ failure to put systemic risk at the top of her priority list will raise suspicions among the electorate. According to a report by CNBC in late January, JPMorgan Chase CEO Jamie Dimon and Goldman Sachs CEO David Solomon had met separately with Waters shortly after she became the Chair of this powerful oversight Committee. The Wall Street Journal further reported that Waters had planned to call the CEOs of the six largest Wall Street banks to testify at a hearing in March or April. That would have included Dimon and Solomon, who are none too eager to appear before a Congressional Committee.
Maybe that hearing will still move forward in April. But here is what is fishy about highlighting the “pattern of consumer abuses” by Wells Fargo: That bank is not a felon. JPMorgan Chase pleaded guilty to two criminal felony counts in 2014 for its role in the Bernie Madoff matter and pleaded guilty again the very next year to one count for its role in rigging foreign currency markets. Citigroup is also a felon, having pleaded guilty to one count in the same foreign currency rigging matter as JPMorgan Chase. Both banks have a serial pattern of abuse. The serial crime spree at JPMorgan Chase became so pronounced that two trial lawyers, Helen Davis Chaitman and Lance Gotthoffer, published a breathtaking book on the matter in 2016, noting the similarities to the Gambino crime family. (See here for Citigroup’s rap sheet.)
As for its contribution to systemic risk on Wall Street, Wells Fargo does not even register among the top five mega banks, according to the most authoritative source on the matter – the Office of Financial Research (OFR). That Federal office, part of the U.S. Treasury Department, was created under the 2010 Dodd-Frank financial reform legislation to keep Federal regulators on the Financial Stability Oversight Council (F-SOC) well informed on systemic risks to the financial system as a whole in order to prevent another 2008-style implosion on Wall Street.
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