Treasury Monitoring Global Markets From Basement Bunker

Shortly after 4 o'clock this morning, a small group of staffers at the U.S. Treasury trooped down a winding staircase into the basement of the building, entering a secure facility called the Markets Room, where the Treasury Department monitors global market conditions on a minute-by-minute basis.

U.S. Department of Treasury headquarters in Washington, D.C.
Source: wikipedia
U.S. Department of Treasury headquarters in Washington, D.C.

Today, they began gathering all of the intelligence they could about the Japanese market, which had traded down dramatically overnight on fears that the nuclear reactor disaster there was spiraling out of control. They were looking for any evidence that Japan’s market woes were about to spread into the rest of the global economy.

But in many ways, it’s just another day at the office for the team of financial analysts who staff Treasury’s Markets Room, where disasters, international incidents, and market swings are all sifted and filtered for their global economic implications.

The day begins early, and the staff sends a morning report to Treasury Secretary Tim Geithner and senior leadership each morning. Throughout the day, they field calls from Geithner, White House staffers and other policy experts inside the building. They also coordinate with colleagues at the Federal Reserve, who are watching global markets with a similar eye for systemic threats to the US economy.

"Always, we are thinking in terms of extending out analysis and try and see where the contagion is, where the spillover is, what the ripple effects might be." -Director of Treasury's Market Room, Michael Pedroni,

And each evening, they write a market summary for President Obama.

“This document is one of the hardest ones we write,” says Michael Pedroni, the director of the Markets Room. “Its always one page, its always got to be giving him the best detail about what messages markets are passing to him, or how we can interpret markets."

Added Pedroni: "Its got to be smart, its got to be in-depth but it can’t be too technical. Because we don't want him to waste his time thinking about how markets function, rather we want to make sure that we're just conveying to him, for a policy maker, what he needs to know.”

Today, that means what’s going on in Japan, Pedroni said.

“Always, we are thinking in terms of extending our analysis and try and see where the contagion is, where the spillover is, what the ripple effects might be.”

The Markets Room began life in the late 1990s, when desks that had monitored US and foreign markets separately were merged into one unit. But it was put in mothballs after 9/11 to allow more funding for anti-terrorism efforts.

In 2007, then-Treasury Secretary Hank Paulson brought the room back to life—just in time for the global market collapse of 2008, which staffers tracked in real-time from their basement bunker.

The information they collect is public, so the Markets Room is not a classified facility, and no Top Secret clearances are needed to enter. But the staff is extremely discreet—they don’t necessarily want the world to know which corporate stock prices the White House is monitoring, or how worried people inside Treasury are about the muni bond market. So the exact content of the reports, and the analysis behind them, is kept confidential.

And not all the information is gathered from flashing screens: While CNBC was in the room Tuesday morning for a live broadcast, Markets Room staffers could be overheard working the phones, talking to traders at various firms, checking on market conditions.

All of that information is synthesized and sent on to Geithner, who calls in as many as several times a day for the latest market intelligence.