Former Republican stalwart turned visionary iconoclast Kevin Phillips raises one big red flag in today’s article for The Washington Independent, The Plunge Protection Team: An Elite Group Protects the Financial Sector
Phillips notes that people who think that the Federal Reserve’s "bailout" of Bear Stearns is a new development are very, very mistaken:
the President's Working Group on Financial Markets – nicknamed "the Plunge Protection Team" by The Washington Post in 1997 – quietly observed its 20th birthday on Mar. 18.
Phillips goes on to ask some very important questions, and to present a useful collection of public references to the "Plunge Protection Team"
The Working Group, or PPT, is much-pondered but reclusive group that has declined to submit to the federal Freedom of Information Act or to testify in detail before Congress about its activities. This is true even though its current chief, Treasury Secretary Henry M. Paulson Jr. – Federal Reserve Board Chairman Ben Bernanke is another prominent member -- made no secret of revving up its operations after he took took over at Treasury in 2006.
The curious reader will wonder: Just what does the PPT do?
Right now, Congress ought to able to pursue this basic question: Is the PPT a kind of committee for the extra-legal coordination, manipulation and subsidization of financial institutions and markets? Has it been stepping in when free-market forces have become too perilous to profits and asset values -- in financial crisis years like 1998, 2001 and 2007. Has Washington decided to protect the financial sector more than any other element of the U.S. economy?
Over the last decade or so, the Treasury Dept. and the Fed have both developed something of a scofflaw attitude toward strict interpretation of federal statutes and regulations. For example, both winked in the late 1990s, as federal regulators allowed Citibank to merge with Travelers Insurance, despite contrary law still on the books. Both winked in more recent years, as major banks set up huge multi-billion-dollar structured investment vehicles, or SIVs, to do on an off-the-books basis what they were not allowed under banking law. Now we have the federally funded J.P Morgan Chase takeover of Bear Stearns.
Phillips then walks the reader through the few public references to the shadowy role of the PPT in "solving" the recurring financial crises of the past two decades, beginning with the stock market crash of October 1987, to the Asian and Russian debt and currency crises of 1997 and 1998, the attacks of 9-11 and more recently, August 16, 2007, when another crash of the stock markets was mysteriously reversed in the final two hours of trading by massive purchases of stock index futures.
Unfortunately, Phillips ends by favorably quoting Paul Volcker, the Federal Reserve Chairman immediately preceding Alan Greenspan. "Volcker," Phillips writes, "is regarded as one of the last honest men in U.S. finance."
Seeing as how Volcker was one of the people most responsible for shifting the U.S. economy from a reliance on productive enterprises, to the speculative frenzy we are burdened with today, Phillips’ characterization of Volcker speaks volumes about what a pack of rapacious jackals the American financial establishment has become.