On Oct. 12, EIR Daily Alert warned that “A Fire Has Started in the Unregulated Private Debt Markets.” The story reported on the late-September bankruptcy filing by auto-parts supplier and derivatives speculator First Brands, and the resulting tremors set off around “midsized Wall Street lender, Jefferies … known to be involved via a ‘specialist invoice-finance fund it manages, Point Bonita Capital.’” Jefferies “admits to $715 million in exposure to First Brands, but it is likely the tip of the proverbial iceberg,” EIR Daily Alert wrote.
Sure enough, bank troubles are spreading. U.S. regional banks stocks were “clobbered” on Oct. 15-16, financial wires report. “Bad Loans by Regional Banks Should Concern Us All,” CNBC titled a Thursday night wire on Oct. 16. Two bancorps, Western Alliance and Zions, are being named as particularly problematic, and their shares, like Jeffries, suffered special drops, as talk of “burgeoning crisis” spreads in Wall Street media.
JPMorgan analyst Anthony Elian had issued a note reassuring (!) clients on Oct. 16, that while there are “all of these credit ‘one offs’ … seemingly occurring in a short period of time,” not to worry; all is is “well-contained” and will have “limited financial impact,” CNBC reported.
Asked on a conference call earlier in the week about the known bankruptcies and bad loans, JPMorgan big-mouth Jamie Dimon was more blunt: “When you see one cockroach, there are probably more,” he told investors.
City of London daily Financial Times called attention on Oct. 16 to the fact that overnight borrowing by banks from the Federal Reserve’s Standing Repo Facility jumped Oct. 14 and 15 to some $15 billion over the two days, the highest levels since that SRF was set up to handle financial crises from the Covid pandemic. FT pointed out that such moves reflect a liquidity squeeze, and then reported that Federal Reserve Chair Jay Powell had signaled to reporters on Oct. 14 that the Fed is preparing to return to big-time money-pumping into the largest global financial bubble in world history. (That’s what blather about moving from “quantitative tightening” to “quantitative easing” means.)
It is definitely time for U.S. citizens to campaign for Lyndon LaRouche’s program to save the people, not the financial bubble! Restore FDR’s Glass Steagall Law to put the system through bankruptcy reorganization; restore the National Bank to provide low-cost credit for productive activities and a vast infrastructure program; and initiate a science-driver program to develop fusion power and colonize the Solar System!
