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John Crudele: Ben, come clean about the PPT!
By John Crudele
New York Post
Thursday, July 27, 2006
Federal Reserve Chairman Ben Bernanke revealed that the secretive Plunge Protection Team meets several times a year, but he dodged a congressman's inquiries about what the group does and whether minutes are kept of those meetings.
So the Post has filed a Freedom of Information Act request for those minutes -- specifically for the meetings that likely occurred immediately after the terrorist attacks in 2001.
I wrote about the Plunge Protection Team in a series of articles earlier this month. Formally called the Working Group on Financial Markets, it was formed in 1988 by President Reagan to advise Wall Street.
Headed by the Secretary of the Treasury, it also has top regulators and the chairman of the Fed as members.
But in addition to giving Wall Street advice, I suspect -- and former White House adviser George Stephanopoulos seems to have confirmed -- that the Plunge Protection team has morphed into something more active.
And Wall Street firms may have been invited to join.
What's clear from answers to questions posed by Rep. Ron Paul, R-Texas, is that new Fed chief Bernanke either doesn't know much about the role of the working group or preferred not to discuss the matter.
And, I think, it's time we found out a little more about an organization that could afford some Wall Street firms an opportunity to reap massive profits at the expense of ordinary investors.
Here's some of the exchange that occurred between Bernanke and Rep. Paul last Thursday at the House Financial Committee hearings.
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Rep. Paul: Good afternoon, Chairman Bernanke. I have a question dealing with the Working Group on Financial Markets. I want to learn more about that group and exactly what authority they have and what they do.
Could you tell me, as a member of the group, how often they meet and how often they have actions? And have they done something recently? And are there reports sent out by this particular group?
Bernanke: Yes, congressman. The president's working group was convened by the president, I believe, after the 1987 stock market crash. It meets irregularly. I would guess about four or five times a year. But I'm not exactly sure. And its PRIMARY function is advisory, to prepare reports. I mentioned earlier that we've been asked to prepare a report on the terrorism risk insurance. So that's what we GENERALLY do.
Rep. Paul: In the media you'll find articles that will claim, at least, that it's a lot more than advisory. You know, if there is a stock market crash, that you literally have a lot of authority, you know, to impose restrictions. And we're talking about many trillions of dollars slushing around in all the financial markets. And this involves the Treasury and, of course, the Fed as well as the SEC (Securities & Exchange Commission) and the CFTC (Commodities Futures Trading Commission) And the reason this came to my attention was just recently there was an article that actually made a charge that out of this group came a position that interfered with the price of General Motors stock. Have you read that? Or do you know anything about that?
Bernanke: No sir. I don't.
Rep. Paul: But back to the issue of meeting. You tell me it meets irregularly. But are there minutes kept, or are there reports made on this group?
Bernanke: I believe there are records kept by the staff. There are staff, mostly from Treasury, but also from other agencies.
Rep. Paul: And they would be available to us in the committee?
Bernanke: I don't know. I'm sorry. I don't know.
* * *
Rep. Paul obviously doesn't have a reporter's knack for the follow-up question, so here's what I would have asked next.
Crudele: Well, Mr. Bernanke, how about you find out? Someone in your position should know if, as former White House adviser Stephanopoulos has claimed, the Working Group on Financial Markets -- the Plunge Protection Team -- has the authority to interfere with the free market for stocks. And we'd also like to know who makes decision for the group, politicians or guys on Wall Street. Don't misunderstand, Mr. Bernanke. I'm not saying what the group is doing is wrong. But why should firms like Goldman Sachs -- from which two of the last four Treasury secretaries have come -- be in a better position than anyone else who gambles in the stock market?
See, that's why I'll never be in Congress.
John Crudele is business columnist for the New York Post.