On June 2 of this year, the Financial Industry Regulatory Authority (FINRA), a self-regulator of Wall Street’s broker-dealers, dropped a bombshell. For the first time, FINRA released trading data for Wall Street’s dark pools – unregistered stock exchanges that the SEC recklessly allows to trade stocks without making the bids and offers public, along with many other details.
The bombshell, that mainstream business media has yet to comprehend, was that the same mega Wall Street banks whose share prices crashed in the 2008 financial crisis are today not only running dark pools for stock trading but they’re trading the stock of their own corporate parents – to the tune of tens of millions of shares a week. Those Wall Street banks include JPMorgan Chase, Bank of America Merrill Lynch and Citigroup.What could possibly go wrong in this arrangement?
Two days after Franklin D. Roosevelt was sworn in as President on March 4, 1933, he declared a nationwide banking holiday lasting to March 13 to stem a mushrooming banking panic and bank runs. The spark that ignited the accelerating panic was the collapse of the Bank of United States in 1930. At the time of its collapse, it was the fourth largest depositor bank in New York City, holding an astounding $268 million for over 400,000 small time depositors. It was the largest banking collapse in the nation’s history at that point.
The name of the bank, incorrectly suggesting it had U.S. government ties, fueled press coverage of the collapse and started other bank runs around the country.
The bank was founded by two men from the garment industry, Bernard Marcus and Saul Singer. Like the dangerous structure of today’s biggest deposit-taking banks, it had a stock trading arm, the Bankus Corp. It was through that trading unit that the bank manipulated the price of its own stock, using the money of depositors, and then used the shares as collateral for loans. Banking examiners later determined that other banks had acted similarly.
It was a clear-cut recipe for disaster that no regulator took action to preempt until, at the height of an economic collapse, Congress passed the Glass-Steagall Act on June 16, 1933, creating Federal Deposit Insurance for bank deposits while also banning banks taking insured deposits from owning stock trading houses.
That legislation protected a nation from the insatiable greed of stock speculators for almost 70 years until its repeal under the Gramm-Leach-Bliley Act on November 12, 1999 under the Clinton administration and at the behest of Citigroup and other Wall Street mega banks who sold naïve editorial boards and a gullible Congress on the benefits of the one-stop banking supermarket model.






















