By John Crudele
October 26, 2006 -- PAY attention!
SourceSomeone - and I don't know who - wants us all to know that since July Henry Paulson, the new secretary of the U.S. Treasury, has spent a lot of time on a little known Washington operation called the President's Working Group on Financial Markets.
That was the major message in a prominent piece this past Monday in The Wall Street Journal.
The big mystery is why do these people want us to know this? And why now? I wrote about the Working Group on Financial Markets back in June when Paulson left Wall Street powerhouse Goldman Sachs to accept the top job at Treasury.
As I documented in a series of half a dozen columns, the mysterious Working Group had been formed in 1988 by an executive order signed by President Reagan and was manned by the heads of various stock exchanges and top government officials in charge of those markets.
The group was supposed to - ya' know - solve financial problems, although the scope of its authority and its powers were never clearly defined.
The group soon became known as the Plunge Protection Team, and for those who were following its stealthy pursuits, the Working Group seemed to be using a blueprint set down by a former Federal Reserve official named Robert Heller.
Soon after Heller had left his government job in 1989 he gave a widely disbursed speech proposing that the Fed be given authority to rig the stock market in case of emergencies.
The Plunge Protection Team - a. k. a. Working Group - probably remained mostly dormant during the good years. But there were sneaking suspicions that it came out of its shell a couple of times, especially after 9/11.
So it's interesting that now - seemingly out of the blue and far removed from any obvious crisis - Paulson is activating the Plunge Protection Team and someone wants us to know about it.
The Journal's Monday piece started: "With just two years to make his mark, new Treasury Secretary Henry Paulson is focusing much of his attention on making American financial markets more competitive . . .
"Since taking the reins in July, the Wall Street veteran has reinvigorated the President's Working Group on Financial markets, which had languished." The article went on to say that before Paulson's arrival, the group met every few months, and sometimes only once a quarter. Now Paulson is insisting that it meet every six weeks.
Among other things, Paulson and the Plunge Protection gang discuss the problems that might occur with hedge funds and derivatives, plus the "government's ability to respond to a financial crisis," according to a source quoted by the paper.
Since the Federal Reserve is the group that would lower interest rates in an emergency, the Plunge Protectors would probably be the ones who'd fix the problem. In other words, they'd throw money at it.
Stocks have been moving steadily upward since July, when Paulson took over the Plunge Protection Team (and the Treasury). And one of the reasons could be that - as I mentioned back then - there is less risk in stocks if the government is providing a safety net.
Less risk, that is, until something bad happens.
john.crudele@nypost.com