Courtesy of Pam Martens
Merry Christmas Eve 2020 and welcome to a rerun of the roaring 20s, complete with one-termer President Herbert Hoover in the White House, Wall Street running wild with unchecked corruption, and unprecedented income inequality.
On Saturday, Bloomberg News attempted to outline the key components of markets gone bonkers “in this year of death, disease and economic calamity,” writing that the “Mania is laid bare in IPO surge, options boom and crypto fever.”
In fairness, the nine reporters who worked on the story, none of whom received a byline but are noted at the bottom of the article, correctly compiled the observable earmarks of this bubble market. But they failed to dig into the dark underbelly of how we got here.
Let’s start with the compromised Wall Street regulators in Washington. The Chair of the Securities and Exchange Commission, Jay Clayton, bolted from his post yesterday, after previously announcing he would leave at year’s end. That’s never a good sign. This is the same man involved in a failed coup to take over the office that criminally prosecutes Wall Street crimes (or not). The SEC can only bring civil charges. Clayton had Geoffrey Berman ousted from the U.S. Attorney’s office in Manhattan to open up the position for his nomination to the post. Wall Street wanted Clayton in the post because he was Wall Street’s lawyer before coming to the SEC. (See our report SEC Nominee Has Represented 8 of the 10 Largest Wall Street Banks in Past Three Years.)
The head of the federal regulator of national banks (those operating across state lines such as JPMorgan Chase’s 5,000-plus branches) is the Comptroller of the Currency. During Trump’s term as President, that position has been filled with Treasury Secretary Steve Mnuchin’s former pals from One West, the foreclosure king that Mnuchin ran before raising money for Trump’s campaign and becoming Treasury Secretary. The first Comptroller under Trump was Joseph Otting, who was CEO and President of One West while Mnuchin was Chairman of the bank. Otting stepped down in May and his successor became Brian Brooks, who had been Vice Chairman of One West. This marked the first time in three decades that former bankers had run the Office of the Comptroller of the Currency. One West came into being in 2009 in the midst of the last financial crisis when Mnuchin, Otting and a group of investors purchased the assets of the failed IndyMac Bank. Mnuchin was savaged during his confirmation hearing for the illegal foreclosures conducted by One West, including foreclosures against active-duty military members.
Mnuchin was also responsible for picking Jerome Powell as the Chair of the Federal Reserve, as reported by Politico and subsequently confirmed by Trump himself. Both Powell and the Vice Chairman for Supervision at the Fed, Randal Quarles, got rich at Carlyle Group, a private equity fund with a string of bankruptcies and job losses. Powell will likely be remembered in the history books for putting the investment manager, BlackRock, in charge of the Fed’s corporate bond bailout program and allowing it to buy up BlackRock’s own sinking junk-bond Exchange Traded Funds as part of the program. This was occurring while BlackRock managed $25 million of Powell’s personal money.
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