The Fed has released data for repo market bailout in Q4, 2019, showing that the top repo money borrowers were the largest financial institutions trading in derivatives, such as JP Morgan, Goldman Sachs, Citibank and Bank of America. The Fed has not yet given an explanation for the sudden crisis of the repo market, which prompted the Fed to “nationalize” it overnight, but it is believed that the trigger was a so-called counterparty risk, i.e. the insolvency of a major derivative counterparty.
The Fed bailout of the repo market began on Sept. 19, 2019. It started with overnight loans, soon adding 14-days loans and eventually even longer term loans. Between Nov. 12 and Nov. 25, for instance, it had loaned $30 billion to JP Morgan securities, a trading unit of JP Morgan Chase, in 13, 14 and 42 days loans. That $30 billion exposure to the Fed did probably increase in 2020, but figures for 2020 are not available yet.
JP Morgan owns $52.3 trillion in derivative notional exposure, the largest among U.S. financial institutions. Together with three other banks, Goldman Sachs, Citigroup and Bank of America, it owns 89.3% of the total derivative exposure of the U.S. banking system. Those same four banks are listed among the largest recipients of the Fed repo bailout loans in Q4, 2019: in the order: JP Morgan, Goldman Sachs, Nomura Securities International, Citigroup Global Markets, Deutsche Bank, Bank of America Securities, Cantor Fitzgerald, as well as others.
You do not need more evidence proving that the financial system is hopelessly bankrupt and, despite that, it continues to engage in derivative speculation for the benefit of the Davos billionaires and the like, while households and producers are left with shrinking income and credit.
When the Fed published the Q4, 2019 figures, only Pam and Russ Martens’ Wall Street on Parade covered it. The next day, the Martens duo exposed the fact that no other media outlet had covered it, although they had mailed all major financial journalists with their article. Among the reasons for the Wall Street-controlled news blackout, the Martens list: fear that such news, adding to the big Fed trading scandal of recent days, might revive the call for Glass-Steagall.
“If the media were now to focus on yet another scandal at the Fed—such as it bailing out the banks in 2019 because of their own hubris once again—there might be legislation introduced in Congress to strip the Fed of its supervisory role over the megabanks and a restoration of the Glass-Steagall Act to separate the federally-insured commercial banks from the trading casinos on Wall Street.” (https://wallstreetonparade.com/2022/01/theres-a-news-blackout-on-the-feds-naming-of-the-banks-that-got-its-emergency-repo-loans-some-journalists-appear-to-be-under-gag-orders/)
