The Central Bank of Israel Doesn’t Want You to Know What U.S. Stocks It Owns; Neither Does the SEC
By Pam Martens and Russ Martens: July 16, 2020 ~
It’s no wonder that American citizens are receiving just a tiny snippet of critical news from mainstream media. Federal regulators have set a new low in withholding documents that the public and the media are entitled to under the Freedom of Information Act (FOIA). These censored documents could inform us on what’s really driving policy decisions in Washington.
Take our latest FOIA brush with the Securities and Exchange Commission (SEC). Foreign central banks and sovereign wealth funds are required under law to report their publicly-traded U.S. stock positions no later than 45 days after the end of each calendar quarter. This is done on Form 13F, which is filed with the Securities and Exchange Commission, if those stock holdings reach $100 million or more.
The central bank of Israel, known simply as the Bank of Israel, has not been doing that for years, or if it has, the SEC has not been making the information public. The Bank of Israel files a 13F form but simply lists the names of the investment management firms it is using to manage its stock portfolio. It includes a file number for each investment manager but that file number does not unlock any publicly available information on the dollar amount or the names of the stocks owned by the Bank of Israel.
We know that the Bank of Israel, as of the end of 2019, held at least 7 percent of its $126 billion in foreign exchange reserves in U.S. stocks because that information is available on the website of the Bank of Israel. That would mean that it owns somewhere in the neighborhood of $8.82 billion in U.S. stocks, just with those foreign exchange reserves. But it could have other significant holdings as well.
Why is it important for the SEC to actually follow the laws it is required to follow? What if Israel’s investments are heavily concentrated in a handful of tech stocks, helping to create a bubble ready to burst. It’s not in the national security interests of the United States to be in the dark about stock bubbles, as we learned so well in the dot.com bust of 2000 and the epic financial crash of 2008.
We filed a FOIA with the SEC on May 21 of this year to obtain the U.S. stock information for the Bank of Israel. Under law, the SEC had 20 business days to send us a response or send us a reason for the delay and an approximate timeframe for when the material would be provided to us. We recently sent two reminders to the SEC that they were in default on the 20 business-day limit and received no response. Just dead silence. We have now filed a complaint with the SEC’s Inspector General.
The central bank of Norway, Norges Bank, made a filing with the Securities and Exchange Commission for the quarter ending March 31, 2020. It shows that Norges Banks owns 2,126 U.S. stocks with a value of $309.5 billion. Its portfolio includes $7.8 billion in Amazon; $7.8 billion combined in two classes of Alphabet, parent of Google; $9.1 billion in Apple; $4.3 billion in Facebook; $9.1 billion in Microsoft; and $3.1 billion in JPMorgan Chase (a Wall Street bank that has pleaded guilty to three criminal felony counts in the past six years and had its precious metals desk called a criminal racketeering enterprise by the Justice Department in September of last year).
The central bank of Switzerland, the Swiss National Bank, is also a large holder of U.S. stocks. According to its 13F filing, as of March 31, 2020, it held 2,480 U.S. stocks worth a total of $94.2 billion. The Swiss National Bank also held multi-billion dollars positions in Alphabet, Amazon, Apple, Facebook and Microsoft.
At a Tuesday House hearing, Congressman Sean Casten said that according to a Forbes analysis, there were $582 billion in stock buybacks in 2018 which represented more than a 52 percent increase over 2017. Forbes estimated that the majority of that increase was due to the tax cuts stemming from the tax overhaul passed by Republicans in Congress. Casten went on to explain that foreigners own 35 percent of U.S. stocks, meaning that taxpayers effectively sent $203 billion, or 35 percent of that $582 billion in stock buybacks, to foreigners.
Now, think about who it is that will live a diminished quality of life as a result of the debt the U.S. took on to give those tax cuts to corporations to use on buybacks benefitting foreign investors and the wealthiest Americans who own the bulk of the stock market. It’s our children and grandchildren that we are burying under this national debt buildup that is heavily weighted to benefit Wall Street rather than workers, families or the small business owner on Main Street.