White House Is Monitoring GameStop Stock Situation; AOC And Elizabeth Warren Weigh In
The situation surrounding GameStop's stock price has caught the attention of Biden's White House.
The White House is monitoring the wild and ever-changing situation with video game retailer GameStop's stock price, while Senator Elizabeth Warren and US Representative Alexandria Ocasio-Cortez have addressed the situation by criticizing Wall Street bankers, hedge funds, private equity firms, and investors. During a daily briefing on Wednesday, new White House press secretary Jen Psaki said US Secretary of the Treasury Janet Yellen and her team are monitoring the situation. She also later said that the SEC is leading the charge on any action rather than the White House directly.
"Our team, our economic team including [Secretary of the Treasury Janet Yellen] and others, are monitoring the situation. It's a good reminder, though, that the stock market isn't the only measure of the health of our economy," Psaki said.
GameStop's stock price has exploded in recent days due in part to the WallStreetBets subreddit taking on hedge funds and short-sellers who bet against the retailer. It is a complicated and involved situation, and it's led to a wider discussion around how online chatter can, in real time, impact the stock market and in turn the US economy. Members of WallStreetBets are now seemingly turning their attention to the struggling movie theatre chain AMC, which is another stock that hedge funds have shorted in recent weeks due to the COVID-19 pandemic.
Online trading sites including TD Ameritrade and Schwab are now restricting trading for GameStop, AMC, and other volatile stocks, according to MarketWatch. Robinhood is not allowing its users to purchase stock in these companies, either. It issued a statement about the move, also mentioning their current volatility.
Senator Elizabeth Warren addressed the ongoing situation in a statement and urged the SEC and other financial regulators to step in. She also delivered sharp criticism of private equity firms and investors for treating stock as a playground for gambling.
"With stocks soaring while millions are out of work and struggling to pay bills, it's not news that the stock market doesn't reflect our actual economy. For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price. It's long past time for the SEC and other financial regulators to wake up and do their jobs--and with a new administration and Democrats running Congress, I intend to make sure they do."
Alexandria Ocasio-Cortez expressed similar sentiments on Twitter, where she also stated that certain people and groups were treating the economy like a casino. She later streamed on Twitch to discuss the situation, and she also spoke with The Stock Guy about how it captivated the internet. What it came down to for her was the ability of the average person to collectively organize with others to have a chance against those in power.
Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino— Alexandria Ocasio-Cortez (@AOC) January 27, 2021
The SEC also issued its own statement, pledging to protect investors as it monitors the "extremely price volatility" we've been seeing in the market over the last few days. This also included a statement directly mentioning retail investors, meaning the amateur investors who have been most responsible for driving up the price of GameStop's stock.
"In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws," the SEC statement said. "Market participants should be careful to avoid such activity. Likewise, issues must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities."
Senator Elizabeth Warren took to Twitter to ask the SEC to give a more thorough explanation of how it's preventing market manipulation. She also said GameStop's stock represented "wild levels of speculation" that was not helping the workers or the customers. She received some criticism for seeming to focus more on the system's stability than the average person's ability to profit from it.
Casino-like swings in stock prices of GameStop reflect wild levels of speculation that don’t help GameStop’s workers or customers and could lead to market instability. Today I told the SEC to explain what exactly it's doing to prevent market manipulation. https://t.co/NWaZe1jFVb pic.twitter.com/MAbjHcq47i— Elizabeth Warren (@SenWarren) January 29, 2021
When pressed to discuss the situation on January 29, new White House press secretary Jen Psaki pointed to the SEC's statement. She stressed that the commission was responsible for dealing this issue and the White House did not want to undermine this. Because of this, there was not much in the way of new information during the conference.
"We, of course, respect the role of regulatory agencies. They are closely monitoring the situation, but it's under their purview at this point in time," Psaki said.
Reports have suggested that GameStop short-sellers have lost $5 billion thanks in part to the action on Reddit. It's not clear how this will all play out, but it's a situation we're keeping our eyes on, so keep checking back with GameSpot for more.
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