Working Group on Financial Markets

The Working Group of the President to the financial markets ( President's Working Group on Financial Markets, colloquially the Plunge Protection Team, about group for protection against stock market falls, short PPT) was established by Executive Order 12631 and this on 18 March 1988 by the President of the United States of America, Ronald Reagan, signed.

The working group was established in response to the events in the financial markets around the Black Monday, 19 October 1987. You should work out the suggested solutions to such crises in the financial markets. These solutions should enhance the integrity, efficiency, orderliness and competitiveness of the American financial markets and maintain investor confidence.

The created by Executive Order 12631 Working Group consists of:

• The American Finance Minister, who chairs the group,
• The Chairman of the Supervisory Board of the Federal Reserve,
• The chairman of the American Securities and Exchange Commission, as well as
• The Chairman of further financial market supervisory authority, the CFTC

Plunge Protection Team

The term Plunge Protection Team was originally the headline of an article in the Washington Post of 23 February 1997 and has since been the colloquial name for the workgroup in the media. Initially, the term was used to express the opinion that the working group served to stabilize the markets with price declines.

Financial market commentators in the British daily newspaper, The Observer and The Daily Telegraph, and the Congressmen and repeated presidential candidate Ron Paul and the authors Kevin Phillips ( who claims to have no first-hand information ) and John Crudele of the group accused, exceeded its legal powers have to. Charles Biderman, CEO of TrimTabs Investment Research, a company that examines capital flows on the financial markets, suspected that the American government or the Fed had made after the financial market crisis of 2008 support purchases on the stock markets. He said that if the money had not come to support the share prices of the traditional market participants, then there must somewhere come forth. "Why should the stock market may not be stabilized? " Furthermore, other government officials have recommended to hold the stock prices stable.

Critics accuse the group of being a sophisticated mechanism to manipulate financial crises in the stock markets by supporting purchases. For this, the government should use capital to selectively buy stocks or stock index futures. Both are prohibited by U.S. law. Other authors refer to these allegations as conspiracy theories. Sprott Asset Management published a report in August 2005, after there is no doubt that the Plunge Protection Team intervenes in financial markets. However, such articles are frequently published in an attempt to convince the banks through such moralsuation from buying stock index futures.

The former board member of the Fed, Robert Heller, represented in the Wall Street Journal the view that the Fed should instead the economy to flood with money and thereby increase the risk of inflation, better targeted buy stock index futures, thus stabilizing the market as a whole. This statement was based on allegations that the Fed had acted the same way. Established analysts called these accusations turn as conspiracy theories, they are too simple and baseless. Author Kevin Phillips wrote in his 2008 book Bad Money to published that he had no interest in becoming an investigator in conspiracies. However, he came to the conclusion that any decisions have been taken at the highest level in Washington, establish a rescue mechanism for the stock market. This should especially protect them from the exposure to national and international monetary and credit crises important banks. Phillips concludes that it would be for the working group, the easiest way to intervernieren in price falls through the purchase of stock index futures. Either in cooperation with the major banks, or by the Fed or the Treasury.

Financial crisis of 2007

On 6 October 2008, the Working Group published a report by announced that they had used the opportunities available to it in order to stabilize the financial markets. The purchase of shares was not mentioned in the report. The state will possibly owners of shares in companies which it has previously granted loans. Because in return for the loans, the state had received warrants as collateral.