NYPost prods Treasury for answers on government's rigging stock market

Maybe This Will Help Treasury Move Faster

By John Crudele
New York Post
Thursday, May 17, 2007

We'd love to help the U.S. Treasury comply with our request for information about the Working Group on Financial Markets.

So The Post's lawyer is sending the following letter, reminding the government of its legal obligations under the Freedom of Information Act.

* * *

Hugh Gilmore
Director, Disclosure Services
U.S. Treasury

Dear Mr. Gilmore:

I write to protest the failure by the Department of Treasury to process Mr. Crudele's request for documents relating to the Working Group on Financial Markets.

As you would be aware, under the Freedom of Information Act, the Department is required to process such requests within 20 working days: See 5 U.S.C. S. 552 (a).

Mr. Crudele lodged his request for documents almost 10 months ago. Yet he has yet to receive any document from the Department of Treasury or any explanation for the Department's failure to produce documents. ...

* * *

There's more to the letter, signed by the Post's lawyer, that I won't quote here.

But it essentially recaps that in my last column I showed how the Treasury's FOIA bureaucracy said it wanted to respond to my request "ASAP," even though our original letter seeking information about the secretive Working Group was sent nearly a year ago.

I know about internal discussions only because I was recently given documents detailing how Treasury was supposedly all worked up over the fact that my request had somehow "fallen through the cracks."

It's not that I think the notes and minutes of Working Group meetings will be arriving on my doorstep anytime soon.

What I do think is that Treasury "ASAP" will turn down my request and give me directions on how to appeal the decision.

Hey, I'm not naive. But I am persistent.

I understand how the game is played, especially since I'm after the innermost thoughts of a group whose nickname is the Plunge Protection Team.

The team was formed by a directive of President Reagan back in the late 1980s, right after the stock market had had some embarrassing sinking spells.

This was also when Robert Heller, who had just left his post as a Federal Reserve governor, proposed very publicly that the Fed should be allowed to rig the stock market in times of emergency.

That's all well and good -- and probably in the public interest.

But I'm now attempting to determine whether the Plunge Protection Team's powers have been expanded in recent years to situations that aren't necessarily emergencies.

I'd also like to know who, exactly, is being drawn into the consultations of the team.

Does it still consist of just top government officials like the Fed chairman and Treasury secretary?

Or have big shots from Wall Street firms -- the kind that could make money knowing the workings of the clandestine government operations -- also been recruited?

In that last column I documented how George Stephanopoulos, who was Bill Clinton's right-hand man, mentioned that the Plunge Protection Team is ready to unofficially act in the event of stock market problems.

Stephanopoulos said that the PPT already has acted during the crisis caused by the failure of Long Term Capital Management, which disintegrated in 1998 and nearly took the U.S. financial system down with it.

And I also know firsthand that such actions were discussed right after the terrorist attacks in 2001.

But the government has been coy about the Team.

Rep. Ron Paul, R-Texas, last year questioned Fed Chairman Ben Bernanke -- who was under oath -- about the Plunge Protection Team.

All the Fed chief would say is that the Team met "irregularly," was mostly advisory, and prepares reports.

"Irregularly": Like when the stock market needs a boost?

"Advisory": Like answering the question, "How can we get stock prices up?"

But I'm not so sure that the meetings are spaced that widely apart.

There have been stories in the press lately that the team is now having frequent meetings under Treasury Secretary Hank Paulson, who took over that position last summer after being the chairman of Goldman Sachs.

That's why we are sending another letter to remind Treasury of its legal obligations not to act in secret.

I think it's time for the government to be more responsive.

And just as an insurance policy I'm also reaching out to some members of Congress who I believe share that view.

Stay tuned.

* * *

John Crudele: No freedom of info on Plunge Protection Team

By John Crudele
New York Post
Tuesday, May 15, 2007

May 15, 2007 -- MY request for information about the actions of the secretive Working Group on Financial Markets at the Treasury Department "seems to have fallen through the cracks," according to the wording of an internal government document I just got my hands on.
That document, dated April 5, 2007, indicates that the Treasury's Disclosure Services division spent quite a lot of time discussing the request I made last summer under the government's Freedom of Information Act.

In fact, "Spotlight on New York Post FOIA Request" is the final issue on a seven-item agenda. And the 13-page PowerPoint presentation titled "Bottom Line" devotes a page and a half to The Post's request.

One of the "lessons learned and the way ahead," according to this presentation, is to "process and respond to Mr. Crudele's requests ASAP."

It's now more than a month since that meeting and I still haven't received documents or even an official letter. I guess ASAP might mean something other than "as soon as possible" in government lingo - perhaps "as soon as pigsfly."

For those of you who haven't been following this saga, let me fill you in.

Back when Goldman Sachs Chairman Henry Paulson took over as Treasury secretary nearly a year ago, I did a multi-column investigation of the Working Group on Financial Markets, which is also endearingly nicknamed the Plunge Protection Team.

As far as I can tell, variations of the group have been in existence since the late 1980s. The PPT operates in that shadowy space between the government's desire to keep the market safe for national security reasons and Wall Street's desire to keep prices up for selfish reasons.

Other newspapers have since reported that - unlike his predecessors - Paulson calls frequent meetings of the Plunge Protection Team, which now seems to include Wall Street big shots as well as top officials such as Federal Reserve Chairman Ben Bernanke and New York Stock Exchange Chairman John Thain.

It's nice that all these folks have time to get together. And it is wonderful that the naive media think these meetings of government and finance brains are innocent. But I'm suspicious.

Of what?

I believe the Plunge Protection Team has emergency powers to protect the stock market if the situation warrants it. (Incidentally, I wholly support such action.)

But I also believe that the Plunge Protectors - left unchecked - could ultimately cause a tremendous loss of confidence in our financial markets. And they could create the very national security problems they think are fixing.

That's why I've asked for the minutes of meetings of the Plunge Protection Team on very specific dates when the stock market pulled a couple of rabbits out of its hat.

I didn't want to get greedy, so I kept the scope of my search narrow.

But, apparently, I must have guessed right and asked about sensitive enough issues because the Treasury ignored that first request and hasn't been any more obliging in response to follow-up letters.

It was only after I wrote an open letter to Paulson and published it in this column on April 3 that Treasury seemed to get the message. Two days later I was on the agenda of its FOIA Operations Overview.

At that meeting it appears that the folks at Treasury decided that my "request does not meet the criteria for an expedited request and asked the OGC [Office of General Counsel][for] concurrence on April 4."

Expedited! The request for this information was made last July!

I also got the impression when I spoke with a Treasury official last week that my request was about to be turned down.

A spokesman at Treasury told me that the government was trying to determine who the "appeals officer" was for this case - an indication, I imagine, that I'm going to be asked to beg someone else for the information to which we are legally entitled.

I'm not surprised. Congress has tried to crack the mystery of the Plunge Protection Team and failed.

After my first FOIA request was filed, Rep. Ron Paul (R-Texas) last fall asked for the very same things I did - the minutes of the Working Group's meetings.

"An informal inquiry to Treasury from our office yielded nothing. They claim such minutes are not taken and don't exist," one of Paul's people told me in an e-mail last September.

Very interesting! This intriguing group of government officials and private financiers meets regularly under Paulson and nobody keeps a record of what they discuss or do.

Why am I so interested?

If the Plunge Protection Team is doing what I suspect - namely, coming to the rescue of stocks whenever it deems it necessary - this would not only change the entire nature of investing in this country but would be the biggest financial story ever.


john.crudele@nypost.com