by Pam Martens and Russ Martens, Wall St On Parade:
Yesterday, at 10:08 a.m., Senator Sherrod Brown, a Democrat from Ohio and the Chair of the Senate Banking Committee, sent out a shocking emailed statement to the press indicating that Brown was “calling on the President to immediately nominate a new Chair who can lead the FDIC at this challenging time and for the Senate to act on that nomination without delay.” By 6:27 p.m. the Associated Press was reporting that Martin Gruenberg would step down as Chair of the FDIC and President Joe Biden would announce his nomination to replace him “soon.”
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The Brown statement was a gut punch to every engaged American and journalist who actually understands what’s at stake here. It was not only a back stab to Gruenberg, it was a back stab to Brown’s highly-respected colleague on the Senate Banking Committee, Senator Elizabeth Warren, who has been fighting to keep the battle for higher capital at the tricked-up-accounting megabanks on Wall Street from getting pushed aside in a suspiciously timed brouhaha over sexual harassment at the FDIC.
Lost in this brouhaha is the fact that not one individual at the FDIC has accused Gruenberg himself of engaging in sexual harassment.
It should also be noted that the Senate Banking Committee is tasked with providing oversight of the megabanks on Wall Street – where credible allegations of rape, sexual assaults and sexual harassment of women have been brought in giant class action lawsuits for decades. Funny thing is – the Senate Banking Committee Chair has asked no Wall Street megabank CEO to resign over those charges. In fact, we cannot remember one Senate Banking hearing that has been convened in the last 20 years to examine the sexual assault and sexual harassment culture at the Wall Street megabanks.
Senator Sherrod Brown also appears to be asleep at the switch over the federal court charges that played out through most of last year when the Attorney General of the U.S. Virgin Islands credibly accused megabank JPMorgan Chase of “actively participating” in the sex trafficking of underage girls for the indicted (and now deceased) sex trafficker Jeffrey Epstein.
There is also the disquieting fact that Sherrod Brown’s political campaign coffers are being fattened by Wall Street’s go-to Big Law firms. In the current election cycle, Brown has received political contributions from Cleary Gottlieb lawyers, the law firm that authored the so-called “independent” report on the culture at the FDIC; Jones Day, the law firm that packed the Trump administration with 12 of its law partners on the very day Trump was inaugurated; WilmerHale (which defended JPMorgan Chase in federal court against the sex trafficking charges involving Jeffrey Epstein); Boies Schiller (which represented Jeffrey Epstein’s victim-plaintiffs in their claims against JPMorgan Chase); Mayer Brown;, Wachtell Lipton; Sidley Austin; Sullivan & Cromwell; Skadden Arps; Steptoe & Johnson; Kirkland & Ellis; and numerous others.
One of the most repulsive moments of the Senate Banking Committee hearing last Thursday was when Senator Tim Scott, the right-wing Ranking Member of the Committee, berated Gruenberg and told him he should resign. This is the same Tim Scott that has thrown his full support behind Donald Trump’s campaign to re-occupy the Oval Office and have power over the launch codes, notwithstanding that Trump was convicted by a jury for sexually-assaulting E. Jean Carroll as well as allegations against Trump of sexual misconduct by at least 17 other women.
This is also the same Senator Tim Scott who counts executives and staff of the Wall Street megabank Goldman Sachs as his campaign’s largest donor base since 2019. (What is a Senator from South Carolina doing with a big donor base in New York’s Wall Street? Parroting scripted text during Senate Banking hearings might offer a clue.)
Brown’s press statement yesterday opened by saying he had reviewed the “independent report” from Big Law firm Cleary Gottlieb about the toxic culture at the FDIC. But Wall Street On Parade had sent four members of Brown’s staff our report of May 8 which documented that any report from Cleary Gottlieb could not be considered “independent” because they are aligned with the megabanks that wanted Gruenberg to disappear along with his pivotal vote mandating higher capital rules.
Our May 8 report noted the following:
“Gruenberg held the deciding vote at the FDIC last July when the bank regulator approved moving forward with proposed new rules to significantly raise the capital levels at the megabanks on Wall Street, particularly those holding trillions of dollars in derivatives off their balance sheet. These include the same banks that secretly received $16 trillion in cumulative emergency loans from the Federal Reserve from December 2007 to July 2010 because they were undercapitalized and teetering on insolvency, as well as receiving billions of dollars in equity infusions from the U.S. taxpayer. They also include the same banks that received trillions of dollars in emergency repo loan bailouts in the last quarter of 2019 and more bailouts during the COVID-19 pandemic in 2020.
“Those megabanks have now banded together to attempt to stop the FDIC, the Federal Reserve, and the Office of the Comptroller of the Currency (OCC) from giving the final approval to these higher capital rules. No one is fighting harder than Jamie Dimon, Chairman and CEO of JPMorgan Chase.”
We also noted in our May 8 report that was conveyed to Brown’s staff that:
“As recently as February of this year, Cleary Gottlieb represented a consortium of the megabanks — Bank of America, Capital One, JPMorgan Chase Bank, PNC Bank, Truist Bank, U.S. Bank, and Wells Fargo Bank – in regard to their membership interests in the fintech company that owns and operates Zelle. The payment app has come under withering criticism for frauds and scams taking place on Zelle.
“Cleary Gottlieb also notes on its website that it has represented the following as financial advisors in various Merger & Acquisition transactions: Bank of America, Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley. These are the five Wall Street megabanks with the largest derivatives exposures.”
Equally noteworthy, Cleary Gottlieb was involved with helping the megabanks on Wall Street try to gut or water down financial reform following the 2008 financial crisis – the worst financial collapse brought on by Wall Street since the 1930s. We quoted from an article by Noam Scheiber that had appeared in The New Republic in 2010:
“While the country was buzzing over the [Obama] inauguration, a group of lobbyists representing its biggest banks assembled in a sleek, wood-paneled conference room at the Washington law firm of Cleary Gottlieb to finalize their counter-strategy on reform…Dimon’s troops had been at the center of the planning for months and helped lead the meeting.
“The main component of the strategy involved derivatives, the financial instrument that allows investors to bet on the price movements of other assets, like stocks and bonds… For the five major U.S. dealers that dominate the market — JP Morgan, Goldman Sachs, Citigroup, Bank of America, and Morgan Stanley — the problem was that derivatives represented billions in annual earnings. They wanted to limit the hit to their bottom line.”
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