Plot thickens in the battle of 'The Plunge'

Last Updated: 6:48 AM, February 11, 2010

Posted: 1:28 AM, February 11, 2010

Comments: 9

John Crudele

The Treasury Department has records of the secret meetings that its President's Working Group on Financial Markets held to discuss the troubled financial markets, after all.

That doesn't mean Washington wants us to know what was discussed, or whether Wall Street executives were in the meetings.

The working group was founded by President Reagan back in 1989, after the stock market nearly sustained its second big crash in two years.

Placed under the Treasury's jurisdiction, it lay dormant for years. It has been nicknamed The Plunge Protection Team because many people -- including me -- believe that in recent years it has been used to stabilize markets.

If so, the PWG could have encouraged the misconception that the stock market was a lot less risky than it really was. In that sense, the PWG would have been instrumental in inflating the stock bubble that burst in 2008, costing a lot of Americans their savings.

The PWG operates in total secrecy. Members include the heads of the Treasury, the Federal Reserve and financial exchanges, but there is no record of who else participates.

It's been suspected that under Hank Paulson, the former chairman of Goldman Sachs who left the Treasury secretary post last year, Wall Street kingpins were brought into the circle.

The reasoning: "market participants," as Paulson liked to call them, could best help fix problems. At the same time, they would be free to use these invaluable connections with the PWG for their benefit, as well.

I first requested information on the PWG back in 2006. That request fell "through the cracks," according to an internal Treasury memo. A year and a half later, after an e-mail discussion among Treasury officials, I learned that minutes and notes of the PWG's meetings didn't exist.

In November 2007 the Treasury changed its tune and responded to my Freedom of Information Act request with 177 pages, which I described in a column as "crap."

"Included in the 177 pages that the Treasury said responded to our request on the actions of the PWG," I wrote, "were 53 pages on which something was redacted -- blacked out so that the discussion was unreadable."

Soon afterwards, The Post and I filed an appeal, saying we wanted internal documents, especially of a meeting held on Aug. 17, 2007. That was the day the Fed began a series of rate cuts, much to the delight of The Street.

Granted, I was fishing. But why should the PWG be allowed to operate unchecked inside our government? Why should this clandestine organization have so much potential control over the nation's financial markets and Americans' wealth?

Well, I got a response to our appeal -- more than two years after it was filed.

It turns out there are an additional 739 pages of PWG documents that the Treasury "withheld . . . in full."

The latest Treasury letter, signed by Deputy Assistant Secretary Matthew Rutherford, said: "After carefully considering your appeal, I am affirming the actions on record referred to in your appeal."

Rutherford said the 739 new pages "concerns certain inter-and-intra agency communications protected by the deliberative process privilege."

Huh?

It continued: "The material redacted pursuant to the deliberative process component subsection (b) (5) was determined to be both predecisional and deliberative." It was deliberative "in that it contains personal opinions, analyses, advice, thought processes, strategies and recommendations, reflecting the 'give and take' of the department's consultative."

Huh? huh?

I misplaced my mumbo-jumbo-to-English dictionary, but I'll do my best to interpret.

The Plunge Protection Team either made "decisions" or contributed to decisions being made by others that it doesn't want us to know about. And this was in 2007 -- well before the so-called financial meltdown that gave Paulson and his crew a free hand.

What was the PWG consulting with Treasury and the Fed on? Rate cuts? Market-rigging operations? The décor of then-Treasury Secretary Paulson's office?

Since we already know about Paulson's exces sively close relationship with Goldman Sachs, shouldn't the Treasury at very least let the public know what sort of chatter was in those 739 pages?

I'll pay for the copying costs. john.crudele@nypost.com

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LiberalsAreIdiots

02/12/2010 5:28 PM

Richard:

You're right about this nation being a Republic and not a "democracy". But I have to disagree on what the worst form of government is.. that would be Communism and/or socialism.

Kingdoms aren't that great either unless you're the king.
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LiberalsAreIdiots

02/12/2010 5:25 PM

President Blamebush is saying he's going to create 95,000 jobs a month for the next year.

That's 1,140,000 jobs total.

If you believe he can do that, I'm a Chinese Jet Pilot.
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Maggie

02/12/2010 12:17 AM

No point was missed, Barnton. True soundeness of the money system depends on sound fiscal and monetary policies that do not aid and abet the profligate behavior by our government much less by the banking industry. The government itself encouraged and even pushed the banking system to take the risks it did because of the political ends of some of our politicians and to artificially raise values and the economy. The government liked the boom times very much. Again sunlight and transparency into the workings of the government decisions would be have prevented this risky behavior at least on behalf of our policymakers.
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Barrnton

02/11/2010 11:41 PM

Truegritter got dumped on but a crucial point was missed. A paper money system requires full faith and credit, the belief that your wealth will be protected by the government issuing the paper. Ultimately the decisions that were made were designed to maintain confidence in the financial system and prevent a fear driven run on the banks. Goldman Sachs actually did fail, as an investment bank. The decision to bail out insurance giant AIG at 100 cents on the dollar was to allow Goldman to survive, albeit as a commercial bank feeding off of the Fed's milk. But had the playbook been open to the public at that critical time, panic would have ruled the day. The public has a right to know – later.
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Maggie

02/11/2010 3:51 PM

Well, "Truegritter", these people are supposed to be the servants of the people and operating for the best interests of the citizens. It turns out they were looking out for themselves and figuring out how to dupe the "unwashed masses"
into picking up the tab for their mistakes. If they do not want to be seen as the greedy scam artists that they appear, they need to drop the secrecy and mumbo-jumbo. Otherwise, it is fair to conclude that our government officials operated to save a favored few at the expense of the rest of us. Mr. Paulson and the others may delude themselves that they are objective and wise are are above their own interests and bias, but we the people are no longer delusional. Sunlight on their deliberations and decisions is the only thing that can ensure that the people's interests are served first, last, and only.
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Richard

02/11/2010 3:50 PM

Truegritter, you must be kidding.

For starters, we are NOT a democracy. Who told you we were? We are a Republic. A democracy runs by mob rule, were 51% of the population votes to steal from 49% of the population. Democracy is the worst form of government, and thank god we don't live in one.

You talk like your a member of the Global Elite, or the Banking community. First off...the "unwashed Masses" you speak so dismissively of, are us Americans, who pay for all of the decisions of the Plunge Protection Team, pay their salaries, and have everything at stake here. So please don't try to act as if we are unable, or incapable of deciding what's best for ourselves.

When you have business interests making decisions on behalf of the "unwashed masses" then the "unwashed masses" have every right to know exactly what those decisions are, especially because its the "unwashed masses" money that's being used by the Plung Protection Team.

How else would you have any accountability? I can't believe you are actually encouraging secrecy. Whenever you have a situation like this, where people in power, have access to the public purse, and can use it without any transperancy, or accountability...thats a license to steal, and they will simply steal everything.

Do you think that those members of the Plunge Protection Team are immune from greed and influence?

You are so naive, and apparently brainwashed.
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Right is Might

02/11/2010 3:43 PM

truegritter, I guess what you mean is: "You can't handle the truth!" Maybe we'll never know.
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truegritter

02/11/2010 1:02 PM

Why should any of the general public have access to such details when they lack the financial sophistication and monetary history to discern the best policies? Should the public have access to sensitive military or intelligence data as well? It is a democracy after all, isn't it?

Crusades are fun to engage in, but the stakes here are too high for implementing the 'bandwagon effect'. Where was all of this interest for said details back in 1999? Or in 2004? It wasn't as pressing a need back in 'good times', now was it?

The last thing our seats of power should do is open up its playbook to the unwashed masses or to the hackneyed press that caters to them. We're trying to get out of a depression, not worsen it, trust me.