Tag: Economy News (Page 1 of 3)

A New Bill is Being Introduced to Fire Gary Gensler

June 13, 2023 / Frank Nez

A new bill is being introduced to fire SEC Chairman Gary Gensler.

Rep. Warren Davidson, R-Ohio, and House Majority Whip Tom Emmer, R-Minn., introduced the SEC Stabilization Act that would restructure the SEC and remove Chairman Gary Gensler from his post, per Fox.

The GOP lawmakers point to what they say is Gensler’s “long series of abuses that have been permitted under the current SEC structure.”

“U.S. capital markets must be protected from a tyrannical Chairman, including the current one,” Davidson said.

“That’s why I’m introducing legislation to fix the ongoing abuse of power and ensure protection that is in the best interest of the market for years to come,” he continued.

“It’s time for real reform and to fire Gary Gensler as Chair of the SEC.”

“American investors and industry deserve clear and consistent oversight, not political gamesmanship,” Emmer said in the release.

“The SEC Stabilization Act will make common-sense changes to ensure that the SEC’s priorities are with the investors they are charged to protect and not the whims of its reckless Chair.”

“Thank you, Representative Davidson, for leading this important effort to restore sanity at the SEC,” Emmer added.

Davidson’s and Emmer’s bill would remove Gensler from his position leading the SEC and restructure the commission to redistribute power from the chair to other commissioners, add a sixth commissioner to the body, and create an executive director position to oversee day-to-day operations.

Unfortunately, Commissioners (including Hester) would still have rulemaking, investigative and enforcement authority and would be subjected to staggered six-year terms.

Dark Pool Trading Has Risen Under Gensler’s Watch

Dark pool trading has risen substantially since Gary Gensler was appointed Chair of the Securities and Exchange Commission (SEC) in April of 2021 by President Joe Biden.

Gary Gensler announced exclusively on Bloomberg that 90-95% of retail orders don’t go through the lit exchange.

The SEC Commissioner says these orders are rerouted to dark pools rather than the NYSE.

What are dark pools?

Dark pools are privately organized platforms, also known to be an alternative trading system accessible to only institutions.

SEC Chairman and Commissioner Gary Gensler says payment for order flow is partly the reason why orders aren’t processed on the lit exchange.

He says retail orders go to wholesalers on an order-by-order competition.

Citadel’s Ken Griffin has praised PFOF stating it’s good for retail investors; however, in 2004 Citadel stated payment for order flow “creates conflicts of interest and should be banned”, according to an SEC file.

PFOF allows market makers to process retails orders in the ‘dark markets’, or dark pools, per SEC Chairman Gary Gensler.

Gary Gensler Dark Pool Interview 2023.

Banning PFOF is one thing but what about retail demand that has been masked by dark pools?

The SEC actually has the power to ban dark pool trading.

Why dark pool trading has risen since Gary Gensler took office is something the retail community is trying to comprehend.

Will SEC Chair Gary Gensler be removed from office? Leave your thoughts in the comment section below.

Also Read: Gary Gensler is Now Being Accused of Market Manipulation

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Stocks Will Crash Big If U.S Defaults on Its Debt

May 22, 2023 / Frank Nez

Analysts are predicting stocks will crash big if the U.S defaults on its debt soon.

A UBS analysis says the S&P 500 could fall by the very least 20%.

“But it’s hard to predict just how bad things could get because the U.S. has never defaulted on its debt.

Analysts believe the selloff could match or surpass a precipitous drop in September 2008, when the House of Representatives rejected a $700 billion rescue package as the U.S. was on the precipice of the global financial crisis,” says NPR.

“The Dow Jones Industrial Average dropped about 778 points that day, which was then the largest single-day drop by points in the index’s history.

A default would also send the U.S bond markets sharply lower.

A default would also weaken the U.S. dollar, which is widely seen as the world’s most important currency given the critical role it plays in the global economy.”

How will this affect the average person?

A sharp drop in stocks would hit retirement or other investment funds across the board.

At the same time, bond markets determine all kinds of borrowing costs, which would go sharply higher if there were a U.S. default.

This would be more bad news for anyone hoping to buy a house or a car at a time when borrowing costs have already risen after the Federal Reserve hiked interest rates aggressively to fight high inflation.

Mortgage rates, for example, would climb even higher, as would interest rates on credit cards.

Simply put, majority of the nation would be experiencing a big financial setback.

The U.S Could Default on Its Debt in June

Treasury Secretary Janet Yellen has previously said the “X-date,” or the date when the US can no longer pay its bills and risks a default, is June 1.

But the actual deadline could be a week later than June 1, Alec Phillips, Goldman Sachs’ chief political economist, told Bloomberg on Friday.

“Our guess right now is that the real deadline is probably more like June 8th, 9th, that’s when they’re at sort of greatest risk,” Phillips said.

Business Insider says Phillips did not explain the X-date calculation in the interview. But these forecasts could vary because these calculations depend on the amount of taxes and other revenue the US government collects versus how much it spends.

While that may buy the US more time to negotiate a deal over raising the debt ceiling, it’s still better to do it sooner or later, Phillips added.

“The reality is that Congress has to do this at some point very soon, and they should just go ahead and do it,” Phillips said. “So waiting for the last minute isn’t necessarily the right move, even though we think that maybe they could go a little bit longer.”

The Democrats and Republicans have remained locked in an impasse over raising the US’ $31.4 trillion debt ceiling — which means the US could run out of money as early as June 1, Treasury Secretary Janet Yellen has warned.

“I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1.

And I will continue to update Congress, but I certainly haven’t changed my assessment.

So I think that’s a hard deadline,” she told NBC.

Latest Economy and Banking News

JPMorgan (NYSE:JPM) is freezing customer bank accounts in the latest bank scandal.

Republican attorneys general from 19 states say the bank is “persistently” discriminating against its own clients and closing bank accounts without warning.

The law enforcement officials, led by Kentucky Attorney General Daniel Cameron, sent a letter to JPMorgan CEO Jamie Dimon stating that the banking giant’s practices go against the company’s own policies on equality, per Business Insider.

The letter, which has now been published by the Wall Street Journal, states that JPMorgan has repeatedly discriminated against customers based on their religious or political beliefs.

“It is clear that JPMorgan Chase & Co. (Chase) has persistently discriminated against certain customers due to their religious or political affiliation.

This discrimination is unacceptable.

Chase must stop such behavior and align its business practices with the anti-discrimination policies that Chase proclaims.”

The attorneys general cite the sudden account closure of a religious liberty organization as an example of the bank’s discriminatory practices.

In May 2022, Chase abruptly closed the National Committee for Religious Freedom’s (NCRF) checking account.

NCRF is a ‘nonpartisan, faith-based nonprofit organization dedicated to defending the right of everyone in America to live one’s faith freely.’

When NCRF inquired about the reason Chase closed the account, multiple bank employees stated that the decision came from the ‘corporate office.’ Specifically, NCRF’s executive director “was informed that a note in the file read that Chase employees were not permitted to provide any further clarifying information to the customer.’’

You can read the full story here.

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Credit Suisse Receives New $17 Billion in Write-offs

March 20, 2023 / Frank Nez

Market News Daily: Credit Suisse receives news $17 Billion in write-offs.

(Reuters) Credit Suisse said 16 billion Swiss francs ($17.24 billion) of its Additional Tier 1 debt will be written down to zero on the orders of the Swiss regulator as part of its rescue merger with UBS, angering bondholders.

FINMA, the Swiss regulator, said the decision would bolster the bank’s capital.

The central bank also helped by providing 100 billion Swiss francs ($108 billion) in liquidity assistance.

The move reflects authorities’ desire to see private investors share the pain from Credit Suisse’s troubles.

Chair Marlene Amstad said FINMA had stuck to the country’s “too-big-to-fail” banking framework in making the decision.

It means bondholders appear to be left with nothing while shareholders, who sit below bonds in the priority ladder for repayment in a bankruptcy process, will receive $3.23 billion under the UBS deal.

“It’s stunning and hard to understand how they can reverse the hierarchy between AT1 holders and shareholders,” said Jerome Legras, head of research at Axiom Alternative Investments, an investor in Credit Suisse’s AT1 debt.

Reuters reported earlier on Sunday that Swiss authorities were considering imposing losses on bondholders as part of the rescue deal.

UBS’ CEO Ralph Hamers told analysts that the decision to write down the AT1 bonds to zero was taken by FINMA, so it would not create a liability for the bank.

How Did Credit Suisse Collapse?

Credit Suisse (NYSE:CS) has gone through financial difficulties many times since its inception but has been bailed throughout its history.

“A string of scandals over many years, top management changes, multi-billion dollar losses and an uninspiring strategy can be blamed for the mess that the 167-year-old Swiss lender now finds itself in”, says Reuters.

Chairman Axel Lehmann is blaming the banks collapse on retail investors.

In an interview in Switzerland, the Chairman says “last autumn we had a social media storm” and highlights the changing environment in the market.

“Last autumn we had a social media storm and this had huge repercussions, more in the retail sector than in the wholesale sector, and too much becomes too much.

And that’s when we reached this point, it’s an accumulation of various facts that contributed to one another then materialized at some point. And this then caused the situation.”

Woah.

A reporter asks Credit Suisse, $CS, Chairman Axel Lehmann: "Who is responsible for this disaster?

He says: "… last autumn we had a social media storm." pic.twitter.com/7gCy4RLm0k
— unusual_whales (@unusual_whales) March 20, 2023

Axel Lehmann also said they were affected by a model that “no longer works in this market environment.”

Should There Be a Limit to How Many Times a Bank Can Get Bailed Out?

The fed said in 2021 that ‘meme stocks’ pose risks to financial stability, something retail investors voiced as the most absurd thing our body of government could conclude.

Overleveraged hedge funds, infinite capital from banks, and complicit regulators have been the main cause of systemic risk.

We’re beginning to see the retail crowd become a scapegoat for our financial system’s failures — though this isn’t going to last long.

The ‘it’s retail’s fault’ card won’t carry weight in lawful request for accountability.

This card was used during the ‘meme stock’ frenzy as well when Robinhood, Citadel, and other brokerages halted trading.

Retail investors were blamed but the truth is there was a massive liquidity problem and short sellers could not afford to close their naked shorts.

The only solution was to halt trading, take short positions again, and wait for prices to fall in order to make up losses.

Regulators waived billions in collateral, bailing institutions out of a massive mess.

More and more investors are losing trust in the financial system.

Now that Credit Suisse has escaped with $17 billion in write-off, it’s now more evident that certain institutions truly are too big to fail.

But I’d love to hear your thoughts on this – leave a comment down below.

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Credit Suisse Clients Are Withdrawing Billions of Dollars

March 10, 2023 / Frank Nez

Market News Daily: Credit Suisse clients withdraw billions.

Credit Suisse (NYSE:CS) clients have withdrawn billions of dollars.

In November, the bank warned investors in a 6-K filing of potential losses due to naked short covering.

Disarming these types of overleveraged positions won’t be easy.

Credit Suisse took a massive hit of $4.09 billion in Q3 and hinted at occurring losses in an upturn in markets.

Now Credit Suisse as postponed publication of its annual report, per Reuters — more on that below.

The bank hired 20 banks for a $4 billion injection in effort to pivot from Q3’s disaster.

Is Credit Suisse on the verge of collapsing?

Here’s the latest Credit Suisse news and update.

Credit Suisse Delays Annual Report..

(Reuters) Credit Suisse has postponed publication of its annual report after a last-minute call from the United States Securities and Exchange Commission (SEC), which raised questions about its earlier financial statements.

The unusual intervention by the U.S regulator is the latest blow to Credit Suisse as it attempts to rebuild investor confidence after a series of scandals and setbacks that have sent its shares plunging and led clients to withdraw billions.

Credit Suisse shares were close to their all-time low in Zurich on Thursday but later recovered much of a 6% loss.

The Zurich-based bank said the SEC had called it late on Wednesday regarding “certain open SEC comments about the technical assessment of previously disclosed revisions to the consolidated cash flow statements in the years ended December 31, 2020, and 2019, as well as related controls.”

The bank had revised how it booked a series of cash flows, including share-based compensation and foreign exchange hedges.

Credit Suisse (CSGN.S) said that following the call it had decided to postpone publication of its 2022 annual report.

“Management believes it is prudent to briefly delay the publication of its accounts in order to understand more thoroughly the comments received,” it said, adding that the 2022 financial results “are not impacted”.

The SEC declined to comment on the matter, a spokesman for the organization said.

Other regulatory authorities were not involved, a person familiar with the matter said.

Swiss financial regulator Finma told Reuters that Credit Suisse had informed it of the delayed publication.

“We are in contact with the bank,” Finma said.

The Bank Signals Red Flags and Raises Concerns

It remains unclear when the annual report will be released.

The delay was unusual, said five attorneys and experts.

“The disclosure is strategically and carefully worded so as not to raise alarms,” said Jacob Frenkel, a former SEC enforcement attorney who is now government investigations and securities enforcement practice chair for law firm Dickinson Wright.

It “lays the groundwork for the explanation for the revisions to the financial statements. Nothing about the release has an ‘enforcement’ centric tone.”

Still, the Credit Suisse announcement concerned analysts.

“(It) does not help investor sentiment and it does not help in rebuilding trust,” said Andreas Venditti from Vontobel.

Daniel Bosshard from Luzerner Kantonalbank described Credit Suisse as “a major construction site” and said “the share is only suitable for turnaround speculators.”

In February, Credit Suisse reported that 2022 brought its biggest annual loss since the 2008 global financial crisis after rattled clients pulled funds from the bank, and it warned that a further “substantial” loss would come this year.

Among a string of scandals, Credit Suisse was hard hit by the collapse of U.S. investment firm Archegos in 2021 as well as the freezing of billions of supply chain finance funds linked to insolvent British financier Greensill.

The bank was also rocked by a prosecution in Switzerland involving laundering money for a criminal gang.

Meanwhile, credit ratings agency Standard & Poor’s downgraded Credit Suisse to just one level above so-called junk status in November last year.

Credit Suisse Warns Investors of Naked Short Covering

The SEC released Credit Suisse’s 6-K filing where the bank warns investors of potential losses due to naked short covering, more on that below.

Credit Suisse took a massive hit of $4.09 billion in Q3 and hints at occurring losses in an upturn in markets.

The bank recently called out AMC Entertainment predicting shares to fall to $0.95 despite the bank’s shares trading below the movie theatre chain company.

Now Credit Suisse is hiring 20 banks for a $4 billion injection in effort to pivot from Q3’s disaster.

In this 6-K filing, Credit Suisse warns investors of potential losses due to the high possibility of naked short covering.

In a statement, the bank says, “Conversely, to the extent that we have sold assets that we do not own, or have net short positions, in any of those markets, an upturn in those markets could expose us to potentially significant losses as we attempt to cover our net short positions by acquiring assets in a rising market.“

“Market fluctuations, downturns and volatility can adversely affect the fair value of our positions and our results of operations.

Adverse market or economic conditions or trends have caused, and in the future may cause, a significant decline in our net revenues and profitability.”

The closing of naked shorts would send affected securities soaring as buying momentum compounds.

Heavily shorted stocks may squeeze in the process, but the results would be disastrous to short sellers.

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Tag: Economy News (Page 1 of 3)

A New Bill is Being Introduced to Fire Gary Gensler

Dark Pool Trading Has Risen Under Gensler’s Watch

Market News Published Daily 📰

Become a Sponsor for only $1/mo.

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Stocks Will Crash Big If U.S Defaults on Its Debt

The U.S Could Default on Its Debt in June

Latest Economy and Banking News

Market News Published Daily

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Credit Suisse Receives New $17 Billion in Write-offs

How Did Credit Suisse Collapse?

Should There Be a Limit to How Many Times a Bank Can Get Bailed Out?

Market News Published Daily

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Credit Suisse Clients Are Withdrawing Billions of Dollars

Credit Suisse Delays Annual Report..

The Bank Signals Red Flags and Raises Concerns

Credit Suisse Warns Investors of Naked Short Covering

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