Psaki: Treasury Secretary Yellen ‘monitoring’ GameStop stock situation
White House Press Secretary Jen Psaki answers reporter questions about Janet Yellen and the GameStop stock surge.
Treasury Secretary Janet Yellen said Thursday that her meeting with top federal regulators later this morning will focus on whether recent market volatility, driven by an army of renegade traders snapping up GameStop shares and other heavily shorted companies, warrants "further action."
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“We need to understand deeply what happened before we go to action, but certainly we’re looking carefully at these events,” Yellen said during an interview on ABC’s “Good Morning America.”
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Yellen called a meeting with the heads of the Securities and Exchange Commission, the Federal Reserve, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission after days of wild swings in shares of GameStop, AMC Entertainment and other stocks favored on the Reddit forum "Wallstreetbets."
GameStop shares, which sat around $19 at the beginning of January, climbed as high as $483 and fell as low as $61 last week, a price surge so dramatic that TD Ameritrade and Robinhood temporarily placed restrictions on trading of the brick-and-mortar video game retailer. The stock price continued to gyrate this week, closing above $200 on Monday but falling below $100 during trading on Thursday.
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"We really need to make sure that our financial markets are functioning properly, efficiently and that investors are protected," Yellen said. "We're going to discuss these recent events, and discuss whether or not the recent events warrant further action."
The craziness escalated after at-home traders 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.
But the moves reverberated across the broader market last week, 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.
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The stock-market rollercoaster, viewed by many as a war waged by the 99% against wealthy Wall Street titans, has also raised questions among lawmakers across the political aisle about increased regulatory oversight and concerns about non-professional investors who were seemingly blocked from trading GameStop shares for a brief period.
Robinhood Financial, through which many of the Reddit investors made their trades, said it curtailed trading due to a demand for $3 billion to back up the moves and cover the risk. Critics accused the app of trying to protect Wall Street investors who had shorted the stocks.
"Secretary Yellen believes the integrity of markets is important and has asked for a discussion of recent volatility in financial markets and whether recent activities are consistent with investor protection and fair and efficient markets," Treasury Department spokesperson Alexandra LaMann told FOX Business on Wednesday.
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