The White House is monitoring the wild and ever-changing situation with video game retailer GameStop’s stock price, while Senator Elizabeth Warren and US Representative Alexandria Ocasio-Cortez have addressed the situation by criticizing Wall Street bankers, hedge funds, private equity firms, and investors. White House press secretary Jen Psaki confirmed this during her daily briefing on Wednesday, telling reporters that US Secretary of the Treasury Janet Yellen and her team are watching what’s going on, though there is no word on if any action will be taken.
“Our team, our economic team including [Secretary of the Treasury Janet Yellen] and others, are monitoring the situation. It’s a good reminder, though, that the stock market isn’t the only measure of the health of our economy,” Psaki said.
GameStop’s stock price has exploded in recent days due in part to the WallStreetBets subreddit taking on hedge funds and short-sellers who bet against the retailer. It is a complicated and involved situation, and it’s led to a wider discussion around how online chatter can, in real time, impact the stock market and in turn the US economy. Members of WallStreetBets are now seemingly turning their attention to the struggling movie theatre chain AMC, which is another stock that hedge funds have shorted in recent weeks due to the COVID-19 pandemic.
Online trading sites including TD Ameritrade and Schwab are now restricting trading for GameStop, AMC, and other volatile stocks, according to MarketWatch.
Senator Elizabeth Warren addressed the ongoing situation in a statement and urged the SEC and other financial regulators to step in. She also delivered sharp criticism of private equity firms and investors for treating stock as a playground for gambling.
“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. 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.”
Alexandria Ocasio-Cortez expressed similar sentiments on Twitter, where she also stated that certain people and groups were treating the economy like a casino.
Gotta admit it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino
— Alexandria Ocasio-Cortez (@AOC) January 27, 2021
Reports have suggested that GameStop short-sellers have lost $5 billion thanks in part to the action on Reddit. It’s not clear how this will all play out, but it’s a situation we’re keeping our eyes on, so keep checking back with GameSpot for more.