The "Plunge Protection Team" is the colloquial name for the Working Group on Financial Markets (WGFM). The Working Group was established by the executive order of President Reagan in 1988, in the aftermath of the stock market plunge of October, 1987.

The group reports to the President, and the official members of the group include the Secretary of the Treasury, the chairman of the Federal Reserve, the chairman of the SEC, and the chairman of the CFTC. In other words, the group members are the four most powerful financial officials in the United States. In practice, the committee can be composed of senior aides and officials that have been designated by those top officials.

According to Treasury Secretary Mnuchin, the WGFM met by telephone on the afternoon of December 24th, to discuss the ongoing plunge in U.S. stock indexes. The very next trading day, the Dow Jones index experienced its largest ever single day point gain, closing up over 1,000 points. The following day, more than half of the 1,000+ points in gains were temporarily lost - until there was a late day reversal that came out of nowhere, and the Dow climbed by over 600 points to close with another gain.

Coincidence?

There is no doubt that the Plunge Protection Team does exist, and that it convened on Christmas Eve. The hotly debated question is whether the WGFM does more than just talk and persuade, and whether it can and does actually intervene in the markets on a more direct basis when needed.

While the popular view is one of the Working Group itself actually spending the money, that is not necessarily the issue in practice. If the Treasury, Fed, SEC and CFTC act in cooperation, with each using their fullest emergency powers by executive order but without full disclosure to the public - what can they actually do and what are the limits?

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