On September 25, 2007, the President's Working Group on Financial Markets, better known as the Plunge Protection Team, announced the formation of two private sector committees, one comprising of Asset Managers and the other, of Investors. It is the first one that is more interesting, as the committee is chaired by one Eric Mindich, best known for his Goldman Sachs wunderkind status, who at 27, was the youngest Goldmanite ever to be promoted to partner. In 2004, Eric split off from Goldman, nonetheless maintaining a favorable relationship with the mothership through its "Fund of Funds" division (we jest), and its various Prime Brokerage client platforms, by starting Eton Park, which with its starting capital of $3 billion, is still likely a record of highest AUM at a fund's inception.
So what was the justification for the creation of this specific committee. From its Mission Statement:
PRESIDENT’S WORKING GROUP ON FINANCIAL MARKETS
ASSET MANAGERS’ COMMITTEE
The Asset Managers’ Committee is comprised of representatives from a broad array of asset managers. Its purpose is to facilitate an exchange of information between the alternative asset management community and the agencies comprising the President’s Working Group on Financial Markets (“PWG”). It will be a standing committee, and its members serve at the behest of the committee’s chairperson for three-year terms. Members may be reappointed for additional terms. It is expected that the committee will develop best practice guidelines, as described below, and also subsequently review and reassess, and if necessary revise, those guidelines.
The first task of the committee is to develop detailed guidelines that would define “bestpractices” for the alternative asset management industry, including practices regarding information, valuation, and risk management systems. They would foster efforts to enhance market discipline, mitigate systemic risk, augment regulatory safeguards regarding investor protection, and complement regulatory efforts to enhance market integrity. These guidelines would review and build on existing industry work and the principles and guidelines released in February 2007 by the PWG, particularly Principle 9, where possible. The initial focus will be on practices for hedge fund managers.
Yet less than a year later, the economy and capital markets collapsed, forcing Hank Paulson to launch an unprecedented sequence of events to prevent the full meltdown of the Western World. Indeed, the same Hank Paulson who one year prior to Lehman's collapse had this to say regarding the Asset Managers' committee:
"These groups are drawn from among the industry's finest in their respective areas," said Treasury Secretary and PWG Chairman Henry M. Paulson, Jr. "The market will benefit if experienced participants develop and implement best practices."
It is safe to say that whatever the committee's true mission was, its stated one was an unmitigated failure. For reference purposes, the full committee consists of the following:
- Eric Mindich, Chair, Eton Park Capital Management
- Anne Casscells. AETOS Capital, LLC
- James S. Chanos, Kynikos Associates LP
- Anne Dinning, D. E. Shaw & Co., L.P.
- Jonathon S. Jacobson, Highfields Capital Management
- Marc Lasry,Avenue Capital Group
- Edward A. Mulé, Silver Point Capital
- Daniel S. Och, Och-Ziff Capital Management
- Daniel H. Stern, Reservoir Capital Group
- William Von Mueffling, Cantillon Capital
- Michael Vranos, Ellington Management Group LLC
Pardon our hypocrisy, but virtually all of these funds (with the likely exception of Kynikos) would have gotten destroyed had Bernanke, the Chairman of the PWG and the President, decided not to intervene. Furthermore, as is well know, the President's Working Group on Financial Markets has long been not only the front for the elusive Plunge Protection Team, but is an organization this is so wrapped in secrecy that not even minutes of its meetings are kept as John Crudele of the NY Post found out post his US Treasury FOIA submission. Yet the Asset Managers' Committee seems to be in that gray area where it is not totally consumed by the PWG, and thus it is possible that a record of its actions may actually not disappear into the void once any market critical decision is made.
Which is Zero Hedge is submitting a FOIA request to the US Treasury to disclose any and all information, records, emails, telephone conversations, with and amongst members of the committee and specifically focusing on former Goldman Sachs employee and Chair of the Asset Managers' Committee Eric Mindich, at and around the time of the Lehman collapse. We expect nothing but heavily redacted pages at best. Yet with recent scrutiny of latent Goldman interests in virtually every segment of the executive branch, Zero Hedge does find it oddly convenient, that in those dark (for Goldman Sachs) days, the two key people making capital markets related decisions were yet another two Goldman Sachs alumni: Hank Paulson and Eric Mindich. And we believe in the spirit of fake transparency so heavily endorsed by the President, it is worth at least attempting to get some additional information on the deliberations by the proxy entities that truly run this country's economy and capital markets.