G.Edward Griffin summary:
The financial crisis on Wall Street did not begin with public concern over the coronavirus. Headlines about the virus did not appear in the US until January of 2020, but the Federal Reserve began making hundreds of billions of dollars each week in low-interest, overnight loans to Wall Street's banks on September 17, 2019. The Fed was creating money to keep banks afloat a little longer, and the cost was passed to the consumer as a rise in the cost of living. Many banks reported massive losses on Monday of this week, including CitiGroup, which lost 16.17%, and JPMorgan Chase, the largest federally-insured bank in the US, fell by 13.55%. The spendthrifts who lit the fuse to this financial bomb now are blaming the coronavirus for the consequences of their folly. -GEG

President Donald Trump is bringing a pea shooter to a gunfight. If you look carefully at the charts on this page from yesterday's trading bloodbath, it's clear that there is a deep financial crisis playing out. The idea that this can be remedied with a payroll tax cut is the stuff of tooth fairies.

And this crisis didn't begin with the coronavirus. Headlines about the virus did not start appearing in the U.S. until January of this year. But the Federal Reserve began making hundreds of billions of dollars each week in cheap loans to Wall Street's banks on September 17, 2019 — the first time it had done this since the 2008 financial crisis. You can earmark September 17, 2019 as the actual date that this Financial Crisis II got underway.

All of the toothless financial reforms of the Dodd-Frank legislation of 2010, together with the rollback of reforms since then, are now coming home to roost — as it was inevitable that they would.

Federal regulators may have their head in the sand about the heavy interlocking relationship between the Wall Street banks and insurance companies that turns into systemic contagion during a financial crisis, but the markets left no doubt about that yesterday. Every major Wall Street bank fell by double digits yesterday as did the insurance companies that are counterparties to Wall Street's derivative trades.

To give you a snapshot idea of just how grave the situation was yesterday, JPMorgan Chase, the largest federally-insured bank in the U.S. which also holds tens of trillions of dollars of derivatives, fell by a larger percentage yesterday than on September 15, 2008 – the day that Lehman Brothers filed bankruptcy at the height of the 2008 financial crisis. JPMorgan Chase fell 13.55 percent yesterday versus just 10.13 percent on September 15, 2008.

Citigroup led the declines among the mega Wall Street banks yesterday with a stunning loss of 16.17 percent. This is the same bank that received the largest government bailout in global banking history in 2008. Why it was even resuscitated by the government in 2008 remains a nagging question and there would be political upheaval if a repeat performance was suggested. Bank of America, parent of the sprawling retail brokerage firm, Merrill Lynch, declined by 14.70 percent while Deutsche Bank, which has a heavy derivatives footprint on Wall Street, shed 12.78 percent – erasing equity capital it desperately needs right now to stay afloat. Goldman Sachs and Morgan Stanley, which have the ability to trade in their own Dark Pools to protect their share price, closed down 10.39 percent and 10.37 percent, respectively.

Among the insurers with derivative exposure to Wall Street, Lincoln National (LNC) led the declines losing 16.82 percent. It is now down by 47 percent in less than a month. MetLife (MET), which sued the government to get removed from the SIFI list (Systemically Important Financial Institution), certainly appeared to be a SIFI yesterday: it lost 16.64 percent and traded as part of the mega bank/insurer derivatives herd. Prudential Financial (PRU), Ameriprise Financial (AMP), and AIG also experienced deep double-digit losses. Not to put too fine a point on it, but AIG received a $185 billion bailout by the government in the 2008 financial crash. It's not likely there is going to be the political will for a replay of that either – especially given President Trump's large libertarian voter base that doesn't believe in government handouts.

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