Howard Baker Quashed Idea of Closing Big Board in Talks With Phelan Oct. 20
WASHINGTON -- New York Stock Exchange Chairman John Phelan called the White House the day after the stock market crash and discussed closing the exchange, but White House Chief of Staff Howard Baker quashed the idea, administration officials said.</br></br>The discussion took place in a series of phone calls around noon on Oct. 20, the day after the Dow Jones Industrial Average plunged 508 points in the worst market slide in U.S. history. By midday on Oct. 20, the market had turned sharply downward after a brief recovery and many major stocks had stopped trading.</br></br>The new details of these and other phone conversations Oct. 20 provide further evidence of how close the major financial markets came to closing on that chaotic day, and show the role played by the White House in attempting to prevent a financial collapse.</br></br>White House officials said Mr. Baker was deeply worried about the psychological impact of closing the markets, and feared a closing would touch off a panic that would make them difficult to reopen. Administration officials briefly discussed whether the White House had the legal power to force the markets to stay open, but ultimately Mr. Baker used only what one aide called "moral authority" to argue in favor of keeping open.</br></br>"I'm not going to say John (Phelan) was in favor of closing," Mr. Baker said in an interview. "I think he was saying it might come to that." Mr. Baker said he was "greatly apprehensive" about closing the stock market and argued: "Don't close it unless it's absolutely essential."