Working Group on Financial Markets

The Working Group on Financial Markets (also, President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631, [http://www.archives.gov/federal-register/codification/executive-order/12631.html Executive Orders ] ] signed on March 18, 1988 by United States President Ronald Reagan.

The Group was established explicitly in response to events in the financial markets surrounding October 19, 1987 ("Black Monday") to give recommendations for legislative and private sector solutions for "enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence".

As established by Executive Order 12631, the Working Group consists of:
* The Secretary of the Treasury, or his designee (as Chairman of the Working Group);
* The Chairman of the Board of Governors of the Federal Reserve System, or his designee;
* The Chairman of the Securities and Exchange Commission, or his designee; and
* The Chairman of the Commodity Futures Trading Commission, or her designee.

Plunge Protection Team

"Plunge Protection Team" was originally the headline for an article in The Washington Post on February 23, 1997, [ [http://www.washingtonpost.com/wp-srv/business/longterm/blackm/plunge.htm washingtonpost.com: Plunge Protection Team ] ] and has since become a colloquial term used by some mainstream publications to refer to the Working Group. [cite news|url=http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2006/10/30/ccview30.xml|title=Monday view: Paulson re-activates secretive support team to prevent markets meltdown|last=Evans-Pritchard|first=Ambrose|date=2006-10-30|publisher=Telegraph UK|accessdate=2008-09-15] [cite news|url=http://www.guardian.co.uk/Archive/Article/0,4273,4258005,00.html|title=Fed to prop up Wall St|last=Wachman|first=Richard|coauthors=Jamie Doward Observer|date=2001-09-16|publisher=Guardian Unlimited|accessdate=2008-09-15] Initially, the term was used to express the opinion that the Working Group was being used to prop up the markets during downturns. [cite news|url=http://www.washingtonpost.com/wp-srv/business/longterm/blackm/plunge.htm|title=Plunge Protection Team|last=Fromson|first=Brett. D.|date=1997-02-23|publisher=Washington Post|accessdate=2008-09-15] [cite news|url=http://www.bloomberg.com/apps/news?pid=20601039&sid=a87VERwuZP8c&refer=home|title=Rubin Should Teach Paulson Secret PPT Handshake|last=Baum|first=Carolyn|date=2007-07-31|publisher=Bloomberg|accessdate=2008-09-15] Financial writers for British newspapers The Observer and The Daily Telegraph, along with U.S. Congressman Ron Paul and writers Kevin Phillips (who claims “no personal firsthand knowledge” and is “not interested in becoming a conspiracy investigator”) [http://www.nytimes.com/2008/08/03/books/review/Gross-t.html] and John Crudele, [cite news|url=http://www.boston.com/bostonglobe/ideas/articles/2008/09/21/the_operators/?p1=Well_MostPop_Emailed4|title=The Operators Behind a seductive Wall Street conspiracy theory|last=Bennett |first=Drake|date=2008-09-21|publisher=The Boston Globe|accessdate=2008-09-21] have charged the Working Group with going beyond their legal mandate. Claims about the Working Group generally include that it is an orchestrated mechanism that attempts to manipulate U.S. stock markets in the event of a market crash by using government funds to buy stocks, or other instruments such as stock index futures—acts which are forbidden by law. However, these articles usually refer to the Working Group using moral suasion to attempt to convince banks to buy stock index futures. [ [http://registeredrep.com/mag/finance_stock_markets_da/ Federal Government Manipulating Equities Market? ] ]

Former Federal Reserve Board member Robert Heller, in the Wall Street Journal, opined that "Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole." His statement has been used to claim that the Fed actually did act in that way. Mainstream analysts call those claims a conspiracy theory, explaining that such claims are simplistic and unworkable. [Cite book| last=Phillips | first=K. | year=2008 | title=Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism | publisher=Viking | isbn=978-0670019076 ] [Bennett, "The Boston Globe".]

Market Crisis of 2008

On 06 October 2008, the working group issued a statement indicating that it was taking multiple actions available to it in order to attempt to stabilize the financial system, although purchase of stock shares was not part of the statement.cite web|url=http://www.treas.gov/press/releases/hp1177.htm|title=Statement by the President’s Working Group on Financial Markets|publisher=United States Department of the Treasury|accessdate=2008-10-06] The government may wind up owning shares in the firms it has provided loans to, as they will receive warrants as collateral for these loans.

Notes

ee also

*Government financial reports
*Single Audit
*Government Accountability Office,
*Revenue (bottom line vs. "top line")
*Government-owned corporation
*Budget theory
*Comprehensive income
*Permanent fund
*Public company
*Crony capitalism
*Government Accountability Office investigations of the Department of Defense
*Federal Accountability Act(Canada)

External links

* Published Working Group reports:
** [http://www.ustreas.gov/press/releases/reports/hedgfund.pdf Hedge Funds, Leverage, and the Lessons of Long-Term Capital Management] April 1999
** [http://www.ustreas.gov/press/releases/reports/otcact.pdf Over-the-Counter Derivatives Markets and the Commodity Exchange Act] November 1999
** [http://www.ustreas.gov/offices/domestic-finance/financial-institution/terrorism-insurance/pdf/report.pdf Terrorism Risk Insurance] September 2006
* "Plunge Protection Team" claims:
** [http://www.nypost.com/seven/10262006/business/treasurys_paulson_plays_with_the_plunge_protectors_business_john_crudele.htm Treasury's Paulson Plays with the Plunge Protectors] by 'John Crudele' in New York Post, October 26, 2006
** [http://www.nypost.com/seven/08092007/business/hey__hank__lets_sit_down_and_chat_about_things_business_john_crudele.htm Hey Hank, Let's Sit Down and Chat about Things] by John Crudele, August 9, 2007 New York Post followup to the above article
** [http://www.usgoldcoins.com/newsletter/2006/PPT.html "P.P.T. and the History of Stabilization Pools"]
** [http://www.lewrockwell.com/decoster/decoster114.html "General Motors, Market Engineering, and Confidence 'Protection'"]
** [http://www.financialsense.com/editorials/reality/2005/0403.html "The Invisible Hand (of the U.S. Government) in Financial Markets] " by Robert Bell
* "Plunge Protection Team" counterclaims:
** [http://www.safehaven.com/article-721.htm The Plunge Protection Team] , by John Mauldin
** [http://registeredrep.com/mag/finance_stock_markets_da/ The Stock Market's Da Vinci Code] , by Jonathan Moreland
** [http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_baum&sid=aASBFuJ4Nq_U I Am Not Now, and Have Never Been, a PPT Member: Caroline Baum] , by C. Baum
** [http://www.everyonesillusion.com/archives/2005/10/caroline_baum_t.htm A commentary on Caroline Baum's article] , by Jacob at the "Everyone's Illusion" blog site
** [http://www.jasmts.com/library.php?page=protection Plunge Protection Team, Is It Real ... Does It Work?] , by James A. Shepherd
** [http://www.dailyspeculations.com/vic/plunge_protection.html A debate: Does the Plunge Protection Team Exist?]