Wall Street became the biggest news of the week thanks to an army of online edgelords besting some of the financial market’s biggest players at their own game.
To vastly simplify what happened: a bunch of Redditors managed to meme a fortune into existence by rallying behind a past-its-prime videogame company that hedge funds were betting would fail. The trolls-against-the-machine brought Melvin Capital to its knees, forcing it into a multibillion-dollar bailout, and ignited intense debate about an apparent double standard over market manipulation and regulatory oversight.
Now, local lawmakers are weighing in.
Congressman Ro Khanna (D-Fremont) today joined a bipartisan call for a probe into Robinhood and TD Ameritrade apps after they banned small investors from buying shares of small companies in hopes of curbing the frenzy.
Yes @aoc. We need an investigation into RobinhoodApp’s decision and who influenced that. And this shows the need for a financial transaction tax on hedge fund shorting and SEC regulations on short selling practices. https://t.co/mYX8Ab3JwH
— Ro Khanna (@RoKhanna) January 28, 2021
On Twitter today, AOC—a member of the stock market-regulating House Financial Services Committee—called Robinhood’s decision to block stock buys “unacceptable,” saying she’d “support a hearing, if necessary.” Republican Sen. Ted Cruz, of Texas, retweeted her remarks, saying, “Fully agree.”
Fully agree. ? https://t.co/rW38zfLYGh
— Ted Cruz (@tedcruz) January 28, 2021
Sen. Elizabeth Warren (D-Mass.) echoed the demands for an investigation.
“It’s long past time for the SEC and other financial regulators to wake up and do their jobs,” she wrote in a prepared statement. “And with a new administration and Democrats running Congress, I intend to make sure they do.”
Added Khanna: “We’re done letting hedge fund billionaires treat the stock market like their personal playground, then taking their ball home as soon as they lose.”
Whether Congress moves forward with an inquiry into the GameStop situation remains to be seen. When asked about the GameStop shorts at a press conference today, House Speaker Nancy Pelosi (D-San Francisco) merely replied, “Interesting, isn’t it?”
— Elon Musk (@elonmusk) January 26, 2021
There’s plenty of illuminating explainers about the mechanics of what’s become known as Gamestonk, but perhaps none as entertaining as The Daily Show’s, which features host Trevor Noah’s face superimposed over a bubble bath-luxuriating Margot Robbie from 2015’s financial-crash period piece The Big Short.
“Basically, there’s a group of people on Reddit who don’t use the stock market to invest, they use it to gamble,” Noah-as-soaped-up-Robbie begins in the viral clip. “And, yeah, that’s what a lot of serious investors do too, but these guys on Reddit are more honest about it and they love to troll the people who aren’t.”
Margot Robbie wasn't available to explain this GameStop situation in a bathtub, so this is the best we could do. pic.twitter.com/Mw1dabmIzQ
— The Daily Show (@TheDailyShow) January 28, 2021
Though pundits balked at the GameStop surge, experts generally agree this was no pump-and-dump scheme, which involves people colluding behind the scenes to hype up and artificially inflate its share price before selling at a profit. Rather, the whole plot unfolded in the open, on r/WallStreetBets , a corner of Reddit that shot up in popularity amid a pandemic-inspired trend in day trading.
There doesn’t seem to be any law preventing a group of investors from organizing the way they did around GameStop, even if it was to stick it to the powers-that-be responsible for the 2008 financial collapse. Or, even if it was for the LULZ.
Khanna called the fiasco a symptom of broader societal problems—and proof of the stock market’s disconnect from most reality for most people.
“American inequality is at new levels of extreme,” he wrote this morning in a lengthy statement to reporters. “The top .01 percent of Americans hold nearly the same share of American wealth as the bottom 90 percent. Nearly half of American families aren’t even invested in the stock market. However, this entire episode has demonstrated the power of technology to democratize access to American financial institutions, ultimately giving far more people a say in our economic structures.”
That apps like Robinhood prevented amateurs from trading while hedge funds continued apace, he added, highlights the need for more regulation and equality in the market.
“Instead of investing in future technologies to help America win the 21st Century, Wall Street poured billions into shorting this stock to crush this company and put workers out of business,” Khanna said. “The future of this country lies in that access and equality across every sector of our economy.”