White House still silent on GameStop frenzy as stock swings rattle Wall Street
Biden meeting with Treasury Secretary Janet Yellen Friday afternoon, but press secretary declined to say whether the 2 would discuss GameStop
The White House on Friday remained tight-lipped about the wild price swings in GameStop shares and other heavily shorted companies, even as the frenzy of activity by an army of renegade traders rattled Wall Street.
Asked whether the Biden administration could play a public role in educating Americans about the ongoing market saga, White House press secretary Jen Psaki demurred, pointing to a statement from the Securities and Exchange Commission.
"I know the SEC issued a new statement earlier this morning, or just before I came out," she told reporters Friday morning. "I'd certainly point you to that. 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."
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President Biden met with Treasury Secretary Janet Yellen this afternoon, but Psaki declined to say whether the two would discuss GameStop.
"I know it's a big story but our focus and our big story is getting the American people back to work," she said. It was disclosed Yellen received around $810,000 in speaking fees from the hedge fund that bailed out one of the primary losers in the recent Gamestop frenzy.
GameStop shares have climbed as high as $483 and fallen as low as $61 this week, a price surge so dramatic that TD Ameritrade, Robinhood and Charles Schwab placed restrictions on trading of the brick-and-mortar video game retailer. After plummeting on Thursday, GameStop shares made a dizzying recovery on Friday after Robinhood — facing a public outcry — said it would reinstate some trading.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GME | GAMESTOP CORP. | 24.13 | +0.18 | +0.75% |
| SP500 | S&P 500 | 5459.1 | +59.88 | +1.11% |
| I:COMP | NASDAQ COMPOSITE INDEX | 17357.881578 | +176.16 | +1.03% |
| I:DJI | DOW JONES AVERAGES | 40589.34 | +654.27 | +1.64% |
The craziness escalated this week after an army of at-home traders in the Reddit forum "Wallstreetbets" put their support behind the stock, betting that share prices would rise even as Wall Street short-sellers gambled the exact opposite. Short-sellers — who bet on stock's decline by selling shares they don't own — have lost billions this week.
But the moves are reverberating across the broader market, with major indexes falling on Friday. Analysts say the losses for the big investors who shorted stocks are forcing them to sell other stocks in order to raise cash.
The stock-market rollercoaster, viewed by many as a war waged by the 99% against wealthy Wall Street titans, has also raised questions among some lawmakers about increased regulatory oversight and concerns about non-professional investors who were seemingly blocked from trading GameStop shares for a brief period.
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"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," Sen. Elizabeth Warren, D-Mass., said in a statement on Wednesday.
Warren, a 2020 presidential candidate and a leading proponent of strict laws to rein in Wall Street and the private equity industry, renewed her push for the Securities and Exchange Commission to more tightly regulate the market.
“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," she said.
In a statement Friday, the SEC said it will work to protect "retail investors" by reviewing the recent trading volatility and pledged to scrutinize actions taken by "brokerages that may “disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.”
“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 said.
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It added: “The Commission is working closely with our regulatory partners, both across the government and at FINRA and other self-regulatory organizations, including the stock exchanges, to ensure that regulated entities uphold their obligations to protect investors and to identify and pursue potential wrongdoing.”