Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez
"With stocks soaring while millions are out of work and struggling to pay bills, it's not news that the stock market doesn't reflect our actual economy," the Massachusetts Democratic senator said in a statement Wednesday. "For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price.
"It's long past time for the SEC and other financial regulators to wake up and do their jobs - and with a new administration and Democrats running Congress, I intend to make sure they do."
Leftist Democratic Rep. Alexandria Ocasio-Cortez also offered her thoughts on the stock surge.
© Tradingview.comThe reddit group #wallstreetbets had forced hedge funds into an untenable position
The reaction to the GameStop stock surge from Warren, who crafted and then later helped set up the Consumer Financial Protection Bureau in 2010 in the aftermath of the Great Recession, sends a signal counter to many of those in the trading industry.
The hedge fund Melvin Capital shorted GameStop stock, a sort of borrowing stock for a certain amount of time and selling it immediately in hopes of buying it again at a lower price, and then returning it to the place it "borrowed" it from, making a profit in the process.
Individuals on the Reddit forum WallStreetBets, armed with the free trading app Robinhood, forced a short squeeze on GameStop stock, driving the price of the stock from below $20 a few weeks ago to a high of over $370 on Wednesday. Some observers saw the dynamic as a Wall-Street-versus-the-masses battle.
The events prompted calls for the Securities and Exchanges Commission to investigate the mass individual activity prompted by the forum and whether it is illegal.
Warren, though, signaled that it is hedge funds and other managers who need to face stricter SEC scrutiny, keeping with her leftist economic populist ideology.
In response to a question about concern over GameStop and some other stocks seeing similar, unusual surges in price, White House press secretary Jen Psaki said new Treasury Secretary Janet Yellen is "monitoring the situation."
"It is a good reminder that the stock market is not the only measure of the health of our economy, and it does not reflect how working and middle-class families are doing," she added.
Comment: What a perfect hobby horse for Oscasional Cortex. But one wonders if she actually understands what is going on. Warren, on the other hand, has been in a position for years to force a fix for this and other openings for Big Money shenanigans. Why hasn't she?