ROBERT K. STEEL and the President's Working Group

Perella Wienberg Parnters' ROBERT K. STEEL biography states "As CEO of Wachovia Corporation in 2008, Mr. Steel oversaw the sale of the bank to Wells Fargo & Co. and served on the Wells Fargo board of directors until 2010.  During his tenure at the U.S. Treasury, he revived the President's Working Group, the core group to respond to the global economic crisis of 2008.

Mr. Steel also spent nearly 30 years at Goldman Sachs, rising to Head of the Global Equities Division, Vice Chairman of the firm and a member of its Management Committee.  He began his Goldman Sachs career in Chicago, and then spent more than seven years in London before returning to the United States to work in the New York headquarters.  Mr. Steel also was a member of the board of directors of Barclays from 2005 to 2006."

"The Working Group on Financial Markets (also, President's Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631, signed on March 18, 1988 by United States President Ronald Reagan.

The Working Group consists of:

The Secretary of the Treasury, or his/her designee (as Chairperson of the Working Group);

The Chairperson of the Board of Governors of the Federal Reserve System, or his/her designee;

The Chairperson of the Securities and Exchange Commission, or his/her designee; and

The Chairperson of the Commodity Futures Trading Commission, or his/her designee.

ROBERT K. STEEL "revived the President's Working Group" under former Goldman Sachs
colleuge and Secretary of the Treasury Henry M. Paulson, "Chairperson of the Working Group", "or his/her designee".

"The Chairperson of the Board of Governors of the Federal Reserve System, or his/her designee" during ROBERT K. STEEL's revival of the President's Working Group at Treasury was Ben Bernanke.

"The Chairperson of the Securities and Exchange Commission, or his/her designee" during ROBERT K. STEEL's revival of the President's Working Group at Treasury was Charles Christopher Cox.

"The Chairperson of the Securities and Exchange Commission, or his/her designee" during ROBERT K. STEEL's revival of the President's Working Group at Treasury was Walter L. Lukken.
In March 2008, the Treasury released "THE DEPARTMENT OF THE TREASURY BLUEPRINT FOR A MODERNIZED FINANCIAL REGULATORY STRUCTURE", listing "Henry M. Paulson, Jr., Secretary" and "Robert K. Steel, Under Secretary for Domestic Finance" on page 3.

On page 83, a section entitled "Liquidity Provisioning by the Federal Reserve" states "the Federal Reserve should consider the current process in terms of ensuring that the process is calibrated and transparent, appropriate conditions are attached to lending, and information flows are adequate.

Second, the President’s Working Group on Financial Markets should consider broader issues associated with providing discount window access to non-depository institutions."

And "The disruptions in credit markets in 2007 and 2008 have caused the Federal Reserve to address some of the fundamental issues associated with the discount window and the overall provision of liquidity to the financial system. The Federal Reserve has considered alternative ways to provide liquidity to the financial system. In addition to the Term Auction Facility (“TAF”) program for depository institutions, the Federal Reserve has had to think more broadly about overall liquidity issues associated with non-depository institutions...

Page 154 states "Much of banks’ reluctance to use the discount window has often been attributed to a“stigma” that discount window borrowing appears to be a signal of fundamental weakness or could lead to additional Federal Reserve regulatory scrutiny. To address those issues, in December 2007 the Federal Reserve established a temporary Term Auction Facility (“TAF”) program. Under the TAF program, the Federal Reserve can auction term funds to depository institutions against the wide variety of collateral used to secure loans at the discount window. All depository institutions judged to be in generally sound financial condition and eligible to borrow under the primary credit discount window program are eligible to participate in TAF auctions. By allowing the Federal Reserve to inject term funds through a broader range of counterparties and against a broader range of collateral than open market operations, this facility helped to promote the efficient dissemination of liquidity.

Page 155 states "The TAF auction process seems to have been successful in encouraging greater use of the discount window. The first TAF auction of $20 billion on December 17, 2007 attracted ninety-three bids worth $61.6 billion. The most recent TAF auction of $50 billion on March 24, 2008 generated eighty-eight bids worth $88.9 billion."

And "The concept of market stability discount window lending is broadly embedded in the framework of the Federal Reserve’s TAF auctions."

Page 156 states "market stability discount window lending should be focused on overall market stability issues that cut across a range of institutions."

On 4/3/2008 "Under Secretary for Domestic Finance Robert K. Steel Testimony Before the Senate Committee on Banking, Housing and Urban Affairs stated "I very much appreciate the opportunity to appear before you today to represent Secretary Paulson and the U.S. Treasury Department, and to join the independent regulators leading the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, and the Federal Reserve Bank of New York."

...You have invited Treasury here today to discuss the ongoing challenges in our credit markets

...The Treasury Department continues to closely monitor the global capital markets, and the past several months have presented to us many important issues and situations to evaluate and address.

...Mr. Chairman, as you appropriately noted in your letter to Secretary Paulson, "it is important to maintain liquidity, stability, and investor confidence in the markets."

...For several months, our financial markets have gone through periods of turbulence, followed by periods of improvement. A great deal of de-leveraging is occurring, which has created liquidity challenges for financial institutions and thereby compromised our credit markets' ability to help be an engine of economic growth.

It took a long time to build up the excesses in our markets, and we are now working through the consequences. Market participants are adjusting, making disclosures, raising capital, and re-pricing assets.

We have continued to engage with our fellow regulators and market participants, so that collectively, we work through these challenges to limit the spillover effects to our economy and make our markets even stronger.

During times of market stress, certain issues may hold the potential to spill over to the broader markets and cause harm to the American economy. This was the case with the events surrounding the funding capability of Bear Stearns between March 13, 2008 and March 24, 2008.

...During this period, regulators were continuously communicating with one another, working collaboratively, and keeping each other apprised of the changing circumstances.

...We weighed the multiple risks, such as the potential disruption to counterparties, other financial institutions, the markets, and the market infrastructure.

...Our role at the Treasury Department was to support the independent regulators and their efforts with private parties as credit markets were operating under considerable stress, and we believed that certain prudent actions would help to mitigate systemic risk, enhance liquidity, facilitate more orderly markets, and minimize risks to the taxpayers.

...The Treasury Department supports the actions taken by the Federal Reserve Bank of New York and the Federal Reserve.

...Upon assessing the Bear Stearns' situation, the Federal Reserve decided to take the very important and consequential action of authorizing the Federal Reserve Bank of New York to institute a temporary program for providing liquidity to primary dealers. Recent market turmoil has required the Federal Reserve to adjust some of the mechanisms by which it provides liquidity to the financial system.

...The Treasury Department and our colleagues comprising the President's Working Group on Financial Markets are addressing the current and strategic challenges, and are doing all we can to ensure high quality, competitive, and orderly capital markets. We seek to strengthen market discipline, mitigate systemic risk, enhance investor confidence and market stability, as well as facilitate stable economic growth."

On 4/28/2008, Under Secretary for Domestic Finance Robert K. Steel Remarks before the Society of American Business Editors and Writers Annual Conference stated "When Secretary Paulson and I arrived at Treasury in 2006, he had a full agenda of global priorities. But on two of his strategic goals – financial preparedness and capital markets competiveness - Domestic Finance has provided leadership.

One of our earliest initiatives was developing protocols for financial preparedness within the President's Working Group on Financial Markets (PWG) – the group chaired by the Secretary of the Treasury that also includes the chairmen of the Federal Reserve Board, the Securities and Exchange Commission and the Commodity Futures Trading Commission. Having spent three decades in financial markets, Secretary Paulson and I understood that periodic market disruptions, many with the potential to impact the real economy, are a reality. While these events are difficult to predict or prevent, we wanted to prepare so as to be ready to take action.

...we undertook a series of initiatives to ensure that our markets remain the world's leader.

...During the three decades we worked in the financial services industry, we lived through many periods of market disruption, including the savings and loan crisis, the Asian financial turmoil, the collapse of Long Term Capital Management, and the dot.com bubble.

...any government intervention should be considered carefully so as to minimize moral hazard and any undue burdens that would damage the efficiency, effectiveness and competitiveness of our markets.

...The goal of public policy should be a marketplace that protects and gives confidence to investors and also provides a fair playing field for businesses. Government must ensure safe, stable and efficient functioning markets, while also being prepared to promptly respond to disruptions when they arise and minimize any contagion effect.

...With this in mind, in the fall of 2006 Secretary Paulson directed the President's Working Group on Financial Markets (PWG) to focus on financial preparedness.

In the last 20 months, the PWG has significantly enhanced its own protocols and procedures to improve communication and facilitate effective coordination and manage actions and responses in the event of a financial market challenge. These protocols include the ability for PWG member agencies to bring into the discussions a broader array of U.S. financial regulators, and given the global and borderless nature of financial markets, international supervisors depending on the situation.

...The PWG works in cooperation with two other established groups to coordinate preparedness efforts: the public-sector Financial and Banking Information Infrastructure Committee (FBIIC); and the private-sector Financial Services Sector Coordinating Council (FSSCC). The FBIIC, chaired by the U.S. Department of the Treasury, is comprised of Federal and State financial regulatory agencies, and has coordinated and improved the resilience and security of the financial infrastructure. The FSSCC is comprised of U.S. exchanges, clearinghouses, financial institutions, financial sector trade associations, and regional coalitions, and has coordinated and improved critical infrastructure protection in the financial services sector.

...This overall commitment to financial preparedness by the PWG proved invaluable when challenges subsequently developed in the summer of 2007.

...The Administration and the independent regulators have responded vigorously to manage and minimize the impact of current challenges on the broader economy. Our goal has been to ease the housing correction, provide an economic stimulus and strengthen market discipline.

...On March 13, the members of the President's Working Group issued a comprehensive review of policy issues related to recent financial market turmoil. The PWG recommended measures to reform mortgage origination, strengthen risk management, enhance disclosure and improve market discipline in the securitization process, and reform disclosure and use of credit ratings.

As implemented, these recommendations will change behavior and strengthen our markets through greater risk awareness, enhanced risk management, strong capital positions, prudent regulatory policies, and greater transparency. The PWG has committed to measuring progress by the end of this year, so as to ensure the implementation of these recommendations."

On 6/23/2008, Under Secretary Robert K. Steel Keynote Address to the Managed Funds Association stated "When Secretary Paulson and I arrived at Treasury in 2006, hedge funds were an increasing area of focus for public policymakers around the world...

It was the strong view of the President's Working Group that two issues, systemic risk and investor protection, are the key areas where policymakers should and must focus their attention with regard to hedge funds. The principles and guidelines highlight how these risks are best addressed through market discipline, disclosure and transparency and a balanced regulatory approach.

...At Treasury, we have been very clear that we believe hedge funds have many benefits for global capital markets. While being an advocate for the benefits of your industry, it is also important for me to be straightforward about the risks hedge funds pose and the responsibilities you must accept. In essence, congratulations are clearly in order to you and your industry, but with the benefits of that success comes additional responsibilities.

...best practices emphasize ...Strong disclosure practices that provide investors what they need in order to make informed decisions...

Attempting to `beat the market' through fraud, manipulation or rumor mongering is an unacceptable breach of market integrity. That's not beating the market, that's cheating the market.

It is important that regulators have broad authority to investigate and prosecute those who seek to gain an unfair advantage. These measures instill confidence in market participants that the market is operating in a fair and transparent fashion where rules matter. Market participants must know the playing field is level and the rules are fair.

...I am confident that in the long term, our markets, financial institutions and regulatory practices will all help to make our capital markets stronger, enabling them to contribute to sustainable economic growth."

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