(Photo: U.S. Capitol, Diego M. Radzinschi/ALM)
Two leading House and Senate committees pledged to hold hearings on the recent gyrations in the stock market as lawmakers voiced bipartisan outrage at platforms that curbed trades in companies like GameStop Corp. that were fueled by the social media site Reddit.
"People on Wall Street only care about the rules when they're the ones getting hurt. American workers have known for years the Wall Street system is broken — they've been paying the price," incoming Senate Banking Chairman Sherrod Brown said in a statement. "It's time for the SEC and Congress to make the economy work for everyone, not just Wall Street."
Representative Maxine Waters, chair of the House Financial Services Committee, also promised a hearing focused on recent market instability and role played by hedge funds.
While neither Brown nor Waters announced dates for their respective hearings, a rare bipartisan collection of lawmakers spoke up to criticize platforms like Robinhood Markets Inc. for limiting trading in some stocks, saying it unfairly disadvantages regular people who should be allowed to trade as freely as hedge funds.
Response of Ocasio-Cortez, Warren
House Speaker Nancy Pelosi called recent trades "interesting," and said relevant agencies should examine the issue. Progressive Democrats including Representative Alexandria Ocasio-Cortez and Senator Elizabeth Warren, as well as GOP Senator Pat Toomey, said the moves merit closer regulatory scrutiny.
"It's turned into a casino so that market manipulators come in and they drive markets up or down and make a profit on it," Warren said of the stock market on CNBC. "The billionaires and some hedge funds are yelling because they're not the ones, the only ones, who make money when the manipulation works."
Toomey, who's poised to become the top Republican on the Senate banking panel, said he's disturbed by Robinhood and other platforms blocking trades.
"I find it very disturbing that a platform would suddenly freeze out investors," Toomey said. "People should be free to make the investment decisions they choose."
Impact on 'Everyday Investors'
In announcing a plan for action, Waters noted the "long history of predatory conduct" by hedge funds, adding that "private funds preying on the pension funds of hard working Americans must be stopped."
"I will convene a hearing to examine the recent activity around GameStop stock and other impacted stocks with a focus on short selling, online trading platforms, gamification and their systemic impact on our capital markets and retail investors," the California lawmaker said in a statement.
