Reply #11: here are some things

[UpInArms]

http://www.archives.gov/federal-register/codification/executive-order/12631.html

Executive Order 12631--Working Group on Financial Markets

Source: The provisions of Executive Order 12631 of Mar. 18, 1988, appear at 53 FR 9421, 3 CFR, 1988 Comp., p. 559, unless otherwise noted.

By virtue of the authority vested in me as President by the Constitution and laws of the United States of America, and in order to establish a Working Group on Financial Markets, it is hereby ordered as follows:
Section 1. Establishment. (a) There is hereby established a Working Group on Financial Markets (Working Group). The Working Group shall be composed of:
(1) the Secretary of the Treasury, or his designee;
(2) the Chairman of the Board of Governors of the Federal Reserve System, or his designee;
(3) the Chairman of the Securities and Exchange Commission, or his designee; and
(4) the Chairman of the Commodity Futures Trading Commission, or her designee.
(b) The Secretary of the Treasury, or his designee, shall be the Chairman of the Working Group.
Sec. 2. Purposes and Functions. (a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence, the Working Group shall identify and consider:
(1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987, and any of those recommendations that have the potential to achieve the goals noted above; and
(2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.
(b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.
(c) The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes.

Sec. 3. Administration. (a) The heads of Executive departments, agencies, and independent instrumentalities shall, to the extent permitted by law, provide the Working Group such information as it may require for the purpose of carrying out this Order.
(b) Members of the Working Group shall serve without additional compensation for their work on the Working Group.
(c) To the extent permitted by law and subject to the availability of funds therefore, the Department of the Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of its functions.

http://www.guardian.co.uk/wtccrash/story/0,1300,552568,00.html

Fed to prop up Wall St

Shadowy committee ready to pour billions into stock markets to avert shares meltdown

Special report: Terrorism in the US

Richard Wachman and Jamie Doward
Sunday September 16, 2001
The Observer

The US Federal Reserve and Wall Street's powerful investment banks are preparing to spend billions of dollars to support the US stock market, which opens this week for the first time since last Tuesday's terrorist attacks on New York and Washington.

A secretive committee - the Working Group on Financial Markets, dubbed 'the plunge protection team' - includes bankers as well as representatives of the New York Stock Exchange, Nasdaq and the US Treasury. It is ready to co-ordinate intervention by the Federal Reserve on an unprecedented scale.

The Fed, supported by the banks, will buy equities from mutual funds and other institutional sellers if there is evidence of panic selling in the wake of last week's carnage.

The authorities are determined to avert a worldwide slump in share prices like the crashes of 1987 or 1929. Investment banks and their broking subsidiaries are to block short-selling by speculators and hedge funds by making it hard for them to obtain prices on favourable terms.

'Everyone is eager to avoid "contagion", where prices fall rapidly as investors react lemming-like to a falling index,' said one banker.

In addition, US regulators are prepared to ease rules that prevent companies from buying their own stock.

The 'plunge protection team' was established by a special executive order issued by former President Ronald Reagan in 1989. It is known to include senior bankers at leading Wall Street institutions such as Merrill Lynch and Goldman Sachs. It has acted before, in the early Nineties and during the 1998 LTCM hedge fund crisis.

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http://www.frbsf.org/education/activities/drecon/2002/0209.html

Does the Federal Reserve System hold stocks or other commonly traded equities like the Bank of Japan recently started doing? (09/2002)

The Federal Reserve System does not hold corporate stocks, but it does hold government securities. In 2001 government securities1 accounted for a significant share of Federal Reserve System's $654 billion in assets. The Federal Reserve's securities portfolio is composed of securities issued by the United States government or government agencies. Securities held by Federal Reserve Banks are obtained and traded through open market operations.

While the Bank of Japan (BOJ) also conducts monetary policy through open market operations, it recently announced a plan to purchase stocks from commercial banks that fit a set of specified criteria. A subsequent analysis in the Financial Times2 explained the reason for the BOJ's decision to purchase stocks from commercial banks: "The bank said falls in the Nikkei stock average, which dipped briefly below 9000 last week, near its 20-year low, could threaten the stability of financial markets and the financial system."

Security Holdings are Important to the Federal Reserve System

At year-end 2001, the twelve Federal Reserve Banks held over $560 million in U.S. Treasury and federal agency securities. This accounted for about 86 percent of total System assets (see Chart 1). The majority of these securities were Treasury bills, notes, and bonds. The balance of the securities portfolio was federal agency securities issued by Federal Farm Credit Banks, the Federal Home Loan Bank, Federal Land Banks, or the Federal National Mortgage Association (Fannie Mae).

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