The answers are 1)No, and 2)Not Applicable. There are many urban legends about the PPT, just like about 9/11, Kennedy, and moon landing conspiracy theories.
What the WGFM actually does is precisely what we witnessed this week-end: arrange an emergency buyout of BSC, to prevent it from formally declaring bankruptcy and throwing the entire financial system into counterparty chaos. Do you know what happens if you have a brokerage account at BSC and BSC goes under? Your account gets frozen until the SIPC sorts things out. Not funny. Do you know what happens, if, in addition to that, you were trading on margin? Your collateral can be seized by BSC creditors. Even less funny.
So the WGFM (which is basically another way of saying the Fed and the Treasury chiefs) arranged for JPM to take over BSC to prevent monumental chaos. That’s precisely what they were supposed to do. And, BTW, this is not really a BSC bailout, as BSC shareholders get nothing (OK, 2 bucks). What really happened last night was to arrange for an extraordinarily fast bankruptcy and liquidation of BSC, presented as a “merger”. All the government approvals were granted in just a few hours, JPM started guaranteeing BSC trades as of this morning, JPM management took on supervisory role as of this morning… That was not a bailout, that was orderly liquidation.
