Originally published on February 28, 2020 4:56 pm
Over the past 100 years, the federal reserve has always stressed the importance of keeping the identities of discount borrowers a secret, saying that if market participants were to ever catch wind of this information, it could increase the chance that depositors will pull their money out of the bank.
So why would JPMorgan Chase N.A., the owner of Chase Bank, the largest depositor in America, openly admit that they intend on borrowing from the Feds much stigmatized emergency lending facilities? No other bank would admit to something like this, evidenced by a recent survey conducted by the federal reserve back in the summer of last year.
(The Wall Street Journal)
“Bankers who used to tap the window say the required disclosures are the biggest reason they won’t do so anymore. In 2016, Stanley Fischer, the Fed’s then-vice chairman, warned he was concerned about the increased stigma hurting the Fed’s ability to help in a stressed market.
Bank executives are also worried that borrowing money from the Fed, even on a short-term basis, could look to the public like one of the widely criticized bailouts of the crisis.
In an August survey, the Fed asked senior bank officials about the likelihood for their respective institutions using the discount window. “Very unlikely” was the unanimous answer”.
But last week, something else happened that was even more unusual.
On the Monday of the markets worst week since the financial crisis, the New York Fed was reported to have mysteriously responded to a Freedom of Information Act request from Institutional Investor, a financial news editorial with 52 years of experience, requesting access to their stockholder ownership list.
According to the article, J.P. Morgan and Citigroup, two of the largest banks in America, account for as much as 75% of the New York Feds outstanding capital stock! That’s quite the concentration of power considering they are the only Fed branch that is legally allowed to manipulate the daily interest rate of a government treasury bond; a market valued at $27 trillion in 2018 (including ABS, MBS)
What made this announcement so strange wasn’t only the timing — which is a conundrum in and of itself — but that there seems to be a complete media blackout. You’d expect something like this to be plastered on the front page of every major financial news website in the country, but the only other place you will find any mention of this historic revelation is buried deep within some obscure Bloomberg article written by Matt Levine about Wall Street Bets, a popular subreddit for stock traders.
Google Search Results Archived
https://archive.is/wGKmY “Capital Stock Master Report new york fed”
https://archive.is/WkHIp “new york fed stockholders list”
https://archive.is/vEIim “new york fed stockholders”
https://archive.is/VbTPC 2 Mar 2020 19:38:31 UTC, new york fed stockholders
The New York Fed is also a private corporation, so they don’t technically have to respond to FOIA requests, and they’ve even used this argument in court.
So why now? With the way things are going, the market looks like it could potentially crash harder than it did back in 1929! And no, that’s not fear mongering, it is a very real possibility!
Let’s just break things down
The largest bank in America just admitted that it needs to utilize the feds discount window, a last resort emergency lending facility for a bank that is unable to secure financing anywhere else.
In response to a sudden 10% spike in the overnight lending rate on back in September 2019, the Fed has so far provided a cumulative $6.6 trillion in term loans to unnamed banks under their repo facility.
Don’t forget that it was just last year, on December. 24th, 2018, that the mainstream media concluded we had officially entered into the first bear market in 10 years, and this was just after breaking the record for the longest bullrun in history.
Then this happened..
Which caused this to happen..
It was the biggest intraday point spike in Dow Jones history.
Then the Fed increased the size of its balance sheet by as much as 10%, and as of now, we still haven’t received an explanation as to why this is happening — nothing that could be considered coherent anyways.
As you can see in the image below, this supposed “Repo Program” is almost indistinguishable from the short term loans utilized by the fed during the financial crisis of 2008.
Now we have J.P. Morgan, owner of Chase Bank, a combination of Washington Mutual, Bank One Corporation, the Manhattan Company, Manufacturers Hanover Corporation, and Chemical Bank — all some of the biggest banks in the country before they merged with each other — asking for emergency loans from the federal reserve, something they haven’t done since the financial crisis.
Let’s also not forget that the government was shutdown while they convened this supposed “Working Group on Financial Markets” — a secretive group that still to this day, after 30 years of operation, nobody seems to know anything about — and practically every market regulator in the country was operating on a skeleton crew at the time.
There’s just something about this whole situation that doesn’t seem to be adding up. The New York Fed is more than 100 years old at this point, and famous for its secrecy, so why in the middle of a Pandemic, and at what seems to be the end of the longest bull run in history, would they finally reveal their stockholder ownership list? What do they have to gain? It simply doesn’t make any sense.
People have been conspiracy theorizing about that list since at least the 1950’s, and it’s not like anybody was forcing them to do this. In addition, with J.P. Morgan’s announcement that they intend on utilizing the feds discount window, they basically just admitted to the entire world that they are unable to secure reliable financing anywhere else.
(Reuters) “We think that this is an important step for us to take to help break the stigma here, and it’s also consistent with the public comments from the Fed”