October 28, 2008
The Secret New Committee That Runs Finance
Posted by David Zaring

Treasury sent one of its people to address SIFMA today on the bailout implementation.  Among the standard litany of things the guy (he was an acting undersecretary, and a last minute fill-in for Paulson himself) noted was this:

In order to address the unprecedented and extraordinary disequilibrium and challenges that our financial markets have experienced, the President's Working Group on Financial Markets, or "PWG" as it is known, has been taking proactive steps to mitigate systemic risk, restore investor confidence, and facilitate stable economic growth.

What is this shadowy group?

The PWG may be our future. It was established in 1988 in response to the market break of 1987 by executive order, and includes (1) the Secretary of the Treasury or designee (as Chair); (2) the Chair of the Board of Governors of the Federal Reserve System or designee; (3) the Chair of the Securities and Exchange Commission, or designee; and (4) the Chair of the Commodity Futures Trading Commission, or designee; and their respective staffs.   

The group has recently emerged not just as a studier of prior crises, but as the focus of future efforts to coordinate financial regulation – making it the informal tip of the spear of Paulson-directed regulatory reform. The PWG, for example, has considered how the financial regulators can together promote investor confidence, track credit system issues (like pursuing on-line clearing and same-day trade comparison for all equity and derivative products), develop effective market controls such as trading halts in emergencies and how to deal with large and rapid unwinding of positions, and so on.

But more to the point, the current financial crisis has made reform more likely, but paradoxically reduced the ability of the current administration to shape that reform, because it has been so distracting. But with the PWG playing a role in the bailout itself, Paulson has done a little bit of regulatory reform in the way he likes - centralization, coordination, and one voice from the Fed, Treasury and the SEC - by fait accompli.

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Comments (4)

1. Posted by Robert J. Porta on October 28, 2008 @ 18:29 | Permalink

Attention Young Voters
A number of my family members and friends were having a friendly discussion as to what the pros and cons would be if Obama or McCain was elected president. Statements for and against one or the other went back and forth; most all consisted of items already spoken to by the candidates. Suddenly, an item came up that none of us had heard either candidate or any of the news media even mention. It is this: "If Obama is elected, he would have to reinstate the Military Draft that was used during the Korean and Vietnamese Wars." It would likely require all young men, ages 18 to 28, and perhaps young women, too, since they are allowed to serve in the same units as the men, to register for the Draft, and await their call to serve two or three years in the military. Our current military has been able to meet its needs with voluntary enlistees, and could continue to do so if McCain is elected, since he is revered by them.
However, Obama is despised by the military due to his claims that the Iraq War was wrong, our soldiers were killing innocent civilians, and losing the war, and the Surge would not work. Since our President is also Commander-in-Chief of the military, tens of thousands of them say they will resign their commissions or accept their discharge at the end of their tour of duty. In order to secure our victory in Iraq, increase our troops in Afghanistan, and be prepared for the trouble with Iran Syria, and Korea, Obama will reluctantly have to draft hundreds of thousands of new replacements. So, if you and your young friends do not wish to suffer an interruption in your life, you must seriously consider for whom to cast your vote.

2. Posted by Chris Allen on October 29, 2008 @ 12:40 | Permalink

Geez, the PWG has been around some time. It's typical agency cross-cutting to coordinate regulatory and policy action. Nothing untoward here.

3. Posted by David Zaring on October 29, 2008 @ 14:34 | Permalink

Yeah, they've been here since the 80s, but haven't always been quite such a focus - especially now, but also in the Blueprint.

4. Posted by Cowboys Snapback on July 30, 2012 @ 22:00 | Permalink

"If Obama is elected, he would have to reinstate the Military Draft that was used during the Korean and Vietnamese Wars."

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