Recent stock market mayhem has done what appeals to rise above self-interest could not — gotten US politicians of all stripes to agree.
While the broad partisan landscape remains combatively polarized, elected officials from the conservative right to the progressive left are standing up against what they condemn as market manipulation by Wall Street.
Their first targets were hedge funds that bet shares would tank for companies in seemingly precarious financial positions such as GameStop, AMC movie theaters and Bed, Bath & Beyond.
The common tactic is known as “short-selling,” and involves investors selling borrowed shares with the expectation of buying them back cheaper in the not-too-distant future, pocketing the difference.
But an army of amateur investors, using the “WallStreetBets” forum on online platform Reddit as a rallying point, sabotaged short-sellers last week with a massive campaign to buy shares, pushing prices up.
Amateur investors outmaneuvering wealthy hedge funds has fascinated the financial press and disrupted the stock market.
It has also prompted political leaders such as Democratic Senator Elizabeth Warren to denounce machinations long at play on the New York Stock Exchange.
“What is happening with GameStop only reminds us of what has been happening for years on Wall Street,” Warren lamented in a CNN interview Sunday.
“It is a rigged game.”
The Massachusetts senator contended that is time for the Securities and Exchange Commission regulatory body to “do its job.”
Independent Senator Bernie Sanders of Vermont also took aim at Wall Street’s business model, calling it “flawed” and saying the “outrageous” behavior of hedge funds and others should be looked into.
Meanwhile, ultra-conservative Texas attorney general Ken Paxton has vowed to crack down on hedge funds and brokerage platforms such as Robinhood, accusing them of combining forces to shut down threats.
Free market trading app Robinhood limited speculative trading last week on shares that were rocketing.
Paxton subsequently announced a probe into Robinhood, which is also being looked at by New York attorney general Letitia James over how it handled GameStop trading.
– Cruz in with AOC –
Some see right-wing and left-wing ideologies converging in the face of a financial system believed to favor the elite.
But the common ground is not harmonious terrain.
Democratic New York congresswoman Alexandria Ocasio-Cortez responded curtly on Twitter to Texas Republican Senator Ted Cruz after he sided with her comment that Robinhood’s attitude was unacceptable.
“I am happy to work with Republicans on this issue where there’s common ground, but you almost had me murdered 3 weeks ago so you can sit this one out,” the congresswoman nicknamed “AOC” told Cruz, referring to the January 6 attack on the US Capitol Building.
“Happy to work with almost any other GOP that aren’t trying to get me killed. In the meantime if you want to help, you can resign.”
Cruz and other conservative Senate Republicans challenged the US presidential election results during a process that historically had been ceremonial.
Former US President Donald Trump was impeached an unprecedented second time after a mob of his supporters stormed the US Capitol building in a deadly attack.
– Monied manipulation –
The Financial Services Commission in the House of Representatives and the Senate Banking Commission have announced hearings intended to shine a light on speculative practices in the stock market.
“People on Wall Street only care about rules when they’re the ones getting hurt,” said Democratic Senator Sherrod Brown, chairman of the Banking Commission.
“American workers have known for years the Wall Street system is broken — they’ve been paying the price.”
Democratic Congresswoman Maxine Waters, who heads the House commission on financial services, has promised an investigation of “predatory and manipulative conduct” in the market.
Pressed on multiple sides, the SEC last week vowed to monitor and evaluate the “extreme volatility” of certain shares in order to protect small investors from abusive activity.