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The Fed’s Repo Bailout and JPMorgan’s 38 Trading Floors

Courtesy of Pam Martens

Trading Floor at JPMorgan Chase in Manhattan (Source -- 60 Minutes Interview with Jamie Dimon, November 10, 2019)

Trading Floor at JPMorgan Chase in Manhattan (Source: 60 Minutes, November 10, 2019)

By Pam Martens and Russ Martens

Jamie Dimon Sits in Front of Trading Monitor in his Office (Source -- 60 Minutes Interview, November 10, 2019)

 

Jamie Dimon Sits in Front of Trading Monitor in his Office (Source: 60 Minutes Interview, November 10, 2019)

Since September 17 of this year, the central bank of the United States, the Federal Reserve, has been pumping hundreds of billions of dollars each week to unnamed trading firms on Wall Street. We know the loans are going to trading firms because the loans are being made to the 24 primary dealers (see list below) with whom the New York Fed conducts open market operations. (The list includes one foreign bank and 23 stock brokerage houses and investment banks.) The New York Fed has publicly disclosed that the loans are going to primary dealers but will not say which firms are getting the bulk of the money.

The Fed did something very similar to this under a facility it called the Primary Dealer Credit Facility (PDCF) during the financial crisis. It kept the names of the firms getting the bulk of the money secret. When the Government Accountability Office (GAO) conducted its audit of the Fed’s loans and released the results to the public in 2011, it turned out that the trading units of Citigroup, Morgan Stanley and Merrill Lynch had received 63 percent of the $8.95 trillion that was loaned under this program. Citigroup’s trading unit received $2 trillion; Morgan Stanley got $1.9 trillion; and Merrill Lynch received $1.775 trillion.

There is nothing in the history of the Federal Reserve Act to suggest that elected members of Congress ever intended that the Federal Reserve would become the lender-of-last-resort to bail out the reckless trading floors on Wall Street – and yet that appears to be what happened in 2008 and what is happening again today.


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