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Treasury Secretary Janet Yellen plans to meet with top federal financial agencies to discuss and evaluate the Democratic administration’s response to Redditors’ ongoing hedge fund shorting game using GameStop and other infamously unpopular stock.
In the meeting scheduled for as early as Thursday, the former chair of the Federal Reserve hopes to collaborate with the Securities and Exchange Commission, Federal Reserve, the New York Federal Reserve, and the Commodity Futures Trading Commission to assess potential actions to combat the stock frenzy that occurred over the last week as well as potential surges in precious metal prices.
“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,” the department said in a statement.
Yellen’s statement comes one week after the SEC warned that “extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence.”
Shortly after the group of Redditor investors began buying up different company’s stock at higher-than-predicted rates, brokerage Robinhood Financial halted trading in GameStop, AMC Entertainment, and other stocks after claiming there was a $3 billion backup at a purchase order clearinghouse. The decision by Robinhood was scrutinized by politicians and small-time investors on both sides of the political aisle who accused the brokerage of defending Wall Street. The accusations only furthered when Big Tech companies such as Google intervened and reportedly deleted more than 100,000 negative reviews listed on the Robinhood app on its store.
The risk of Yellen’s coordinated federal intervention also raised some eyebrows after a recent report demonstrated how Robinhood’s biggest client, Citadel LLC, as well as other large financial firms previously paid the secretary more than $7 million over the last two years in speaking fees. When pressed about the potential conflict of interest, White House press secretary Jen Psaki brushed off reporters’ concerns, failing to address whether Yellen plans to recuse herself from the $GME stock shorting investigation.
“Separate from the GameStop issue, the secretary of the Treasury is one of the world-renowned experts on markets, on the economy. It shouldn’t be a surprise to anyone she was paid to give her perspective and advice before she came into office,” Psaki said.