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Partisan Congress unified by outrage after application Robin Hood and other retail companies have frozen some individual transactions in response to a massive spike in GameStop and AMC stock powered by internet chat rooms. Some hedge funds had bet big on the downfall of these companies, and the resulting volatility and Robinhood’s willingness to impose restrictions in a way that seemed to favor large investors and punish smaller ones, which angered Democrats and the Republicans.
“Completely agree,” tweeted Senator Ted Cruz, one of the most conservative senators, in response to a tweet from Representative Alexandria Ocasio-Cortez, a Democratic socialist who rebuked Robinhood for deciding “to prevent retail investors from buying stocks while hedge funds can freely trade stocks as they see fit.”
The heads of the House and Senate committees responsible for overseeing the financial industry plan to hold hearings on Robinhood’s decision and the circumstances that led to the market changes.
“We need to deal with hedge funds whose unethical conduct has directly led to recent market volatility and we need to look at the market in general and how it has been manipulated by hedge funds and their financial partners to enjoy it while others pay the price, ”said Maxine Waters, chair of the House financial services committee.
Rep. Patrick McHenry, the senior Republican on the committee, said in a statement he had asked Waters to call a hearing.
On Capitol Hill Thursday afternoon, Cruz called for transparency and said lawmakers demanded to know why Robinhood had halted trading in defended stocks on Reddit by WallStreetBets and other discussion forums.
Moderate Republican Senator Pat Toomey called the retail investor freeze “very disturbing,” but also expressed concern that the trading frenzy would end. “By the way, it’s going to end badly for the most part, it’s a bubble, it’s going to burst and it’s going to end up collapsing in the price,” Toomey said.
The new chairman of the Senate Banking Committee, Sherrod Brown, also said he plans to hold a hearing on the matter.
“American workers have known for years that the Wall Street system is broken. They have paid the price. It is time for the SEC and Congress to make the economy work for everyone, not just Wall Street.” , we read in its press release.
In a television interview Thursday, Senator Elizabeth Warren directly attacked the US Securities and Exchange Commission, accusing the agency of failing to articulate the rules and letting the stock market turn into a “casino.”
“We need an SEC that is going to step up, that is going to put in place clear rules and then be willing to enforce those rules,” Warren said.
Late Wednesday, the SEC released a statement saying it was “monitoring current market volatility” and would work with regulators to assess the situation.
At the White House press conference on Thursday, press secretary Jen Psaki referred reporters to the SEC statement and declined to provide further comment. Psaki said on Wednesday that members of the economics team, including Secretary Janet Yellen, were also monitoring the situation.
On Thursday night, an email from Robinhood to users of the service said it would allow “limited purchases” of GameStop and AMC titles on Friday.
Despite their common response to the actions of e-commerce services, tensions between political parties remained after the January 6 Capitol riots.
“I’m happy to work with Republicans on this issue where there is common ground, but you almost got me murdered 3 weeks ago so you can drop this one,” Ocasio wrote. Cortez in a tweet responding to Cruz’s support for his position on Robinhood.
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