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Will Paulson ever consent to answer the right questions?

Section: Daily Dispatches

Hey, Hank, Let's Sit Down
and Chat about Things

By John Crudele
New York Post
Friday, August 9, 2007

There's news in my fight to get secret information from the U.S. Treasury Department.

Hold onto your seats.

Last week, the Treasury acknowledged that it got my latest letter. Yep, that's it.

It only took a month and a half to process this extraordinary bit of news but the Treasury -- the folks with whom we entrust the nation's bank accounts -- now acknowledges that its mail system works (though not so well.)

Well, break out the Cristal. And throw some dogs on the grill (and no, I don't mean that in a Michael Vick way). We're gonna have a party, 'cause the Treasury is alive and barely functioning.

In case you are wondering what has got me so "Cramered-up" -- translation: irrationally giddy and morose at the same time -- it's the fact that more than a year ago the Post requested some very specific details about an organization called the President's Working Group on Financial Markets.

This covert group operates out of the Treasury, which wants people to know that it exists but doesn't want us to know much more.

Granted, this is very delicate stuff because I suspect this organization -- hidden in plain sight inside the Treasury -- is the fixer in times of financial crisis. And that's OK with me, except that I believe any organization with such extraordinary powers needs to be monitored.

The President's Working Group has been nicknamed the Plunge Protection Team. And that organization's antics crossed a lot of Wall Street people's minds on Aug. 1 -- a week ago yesterday -- when the Dow Jones Industrial Average made a suspicious 150-point gain in the final 20 minutes of trading.

To refresh your memory, the stock market had been getting drubbed in the days before that rally mainly because of worries over subprime mortgage delinquencies and the effect these problems would have on Wall Street and the economy as a whole.

The day after the mysterious 150-point gain, The Wall Street Journal -- which is soon to be the kin of this newspaper -- headlined the Dow's rise as "out of nowhere."

"Wall Street traders and analysts couldn't cite a specific catalyst for the quick rally, although a wave of pre-placed electronic orders to buy and an earlier pullback in crude oil prices seemed to help," the paper said.

Sure enough, those electronic orders first came from Goldman Sachs (where Treasury Secretary Hank Paulson had been chairman) and was quickly followed by orders to buy stock index futures contracts from Merrill Lynch, Deutsche Bank, and Citigroup.

That's what you'd call a concerted effort -- like what the President's Working Group (aka the Plunge Protectors) would do. Which gets me to the point of this column.

Freedom-of-information requests aside, I'm sending a letter directly to Paulson requesting an interview so I can ask him straight out what the heck the Working Group is working on.

It seems like a reasonable request. Paulson has submitted to other interviews recently and on CNBC he even volunteered the information that the Working Group was preparing for the next financial crisis.

Larry Kudlow, a CNBC commentator, couldn't seem to come up with the follow-up question but I can: "Mr. Paulson, just what the heck are you talking about? Is the Working Group intervening in the financial markets today, as it did in 1998 when Long Term Capital Management's heavy speculation in the markets, nearly put the U.S. financial system on its ass?"

Lets see how he'll answer someone who'll ask the right questions.


John Crudele is business columnist for the New York Post.

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