The President's Working Group on Financial Markets, known colloquially as the Plunge Protection Team, or "(PPT)" was created by Executive Order 12631,, which appears and purports to be a copy of the original: signed on March 18, 1988, by United StatesPresident
Ronald Reagan
Ronald Wilson Reagan ( ; February 6, 1911June 5, 2004) was an American politician, actor, and union leader who served as the 40th president of the United States from 1981 to 1989. He also served as the 33rd governor of California from 1967 ...
.
As established by the executive order, the Working Group has three purposes and functions:
"(a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence, the Working Group shall identify and consider:
:(1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987, and any of those recommendations that have the potential to achieve the goals noted above; and
:(2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.
(b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.
(c) The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes."
The Working Group consists of:
* The Secretary of the Treasury, or his or her designee (as Chairperson of the Working Group);
* The Chairperson of the Board of Governors of the Federal Reserve System, or his or her designee;
* The Chairperson of the
Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
, or his or her designee; and
* The Chairperson of the
Commodity Futures Trading Commission
The Commodity Futures Trading Commission (CFTC) is an independent agency of the US government created in 1974 that regulates the U.S. derivatives markets, which includes futures, swaps, and certain kinds of options.
The Commodity Exchange Ac ...
, or his or her designee.
Plunge Protection Team
"Plunge Protection Team" was originally the headline for an article in '' The Washington Post'' on February 23, 1997, and has since been used by some as an informal term to refer to the Working Group. Initially, the term was used to express the opinion that the Working Group was being used to prop up the
stock market
A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange, as ...
s during downturns. Financial writers for British newspapers '' The Observer'' and '' The Daily Telegraph'', along with U.S. Congressman
Ron Paul
Ronald Ernest Paul (born August 20, 1935) is an American author, activist, physician and retired politician who served as the U.S. representative for Texas's 22nd congressional district from 1976 to 1977 and again from 1979 to 1985, as well ...
, writers Kevin Phillips (who claims "no personal firsthand knowledge" ) and
John Crudele
John Crudele is a columnist and business journalist in the United States. He writes syndicated political columns for the ''New York Post''. Earlier in his career he worked for Reuters, ''The New York Times'',
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." Author Kevin Phillips wrote in his 2008 book ''Bad Money'' that while he had no interest "in becoming a conspiracy investigator", he nevertheless drew the conclusion that "some kind of high-level decision seems to have been reached in Washington to loosely institutionalize a rescue mechanism for the stock market akin to that pursued...to safeguard major U.S. banks from exposure to domestic and foreign loan and currency crises." Phillips infers that the simplest way for the Working Group to intervene in market plunges would be through buying
stock market index
In finance, a stock index, or stock market index, is an index that measures a stock market, or a subset of the stock market, that helps investors compare current stock price levels with past prices to calculate market performance.
Two of the ...
futures contracts, either in cooperation with major banks or through trading desks at the U.S. Treasury or Federal Reserve.
Government Accountability Office
The U.S. Government Accountability Office (GAO) is a legislative branch government agency that provides auditing, evaluative, and investigative services for the United States Congress. It is the supreme audit institution of the federal govern ...
Federal Accountability Act
The Federal Accountability Act (full title: "An Act providing for conflict of interest rules, restrictions on election financing and measures respecting administrative transparency, oversight and accountability") (the Act) is a statute introduce ...