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'Tax the rich': Progressive lawmakers react to GameStop frenzy with push for more oversight

Rep. Alexandria Ocasio-Cortez said that "it’s really something to see Wall Streeters" who treat "our economy as a casino" complain.
Rep. Alexandria Ocasio-Cortez, D-N.Y., speaks on May 1, 2020, in the Bronx.
Rep. Alexandria Ocasio-Cortez, D-N.Y., speaks on May 1, 2020, in the Bronx.Frank Franklin II / AP file

Progressive lawmakers are reacting to the Reddit-led surge in GameStop stock sales — and Wall Street's response — to push for more oversight on financial institutions.

"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," Rep. Alexandria Ocasio-Cortez, D-N.Y., tweeted Wednesday. "Anyways, Tax the Rich," she added.

Users of the Reddit message board r/WallStreetBets rallied this week to boost the struggling video game retailer and other companies' stocks after several hedge funds took short positions on the stocks. The effort, which sparked backlash from Wall Street firms who lost huge sums as a result, hit a roadblock on Thursday morning after the personal trading app Robinhood stopped allowing users to buy those stocks.

Calling Robinhood's decision "unacceptable," Ocasio-Cortez said she would "support a hearing if necessary" to investigate the issue.

"This is a serious matter," she said. "Committee investigators should examine any retail services freezing stock purchases in the course of potential investigations — especially those allowing sales, but freezing purchases."

Some conservatives expressed similar concerns. Sen. Mike Lee, R-Utah, tweeted that "we should investigate" Robinhood's actions while Sen. Ted Cruz, R-Texas, shared Ocasio-Cortez's tweet and said, "I fully agree."

Ocasio-Cortez said she'd be happy to work with Republicans on the issue — but not Cruz. She cited his push to reject Electoral College votes on Jan. 6, before and after the storming of the U.S. Capitol by a mob of Trump supporters. Some of the rioters had threatened to kill Ocasio-Cortez.

"Happy to work w/ almost any other GOP that aren’t trying to get me killed. In the meantime if you want to help, you can resign," she fired back.

Rep. Rashida Tlaib, D-Mich., a member of the progressive group known as "The Squad" that includes Ocasio-Cortez, also called for a congressional investigation into Robinhood's "market manipulation." GameStop's stock surged to $469 but fell sharply after Robinhood restricted transactions, enraging users.

"This is beyond absurd. @FSCDems need to have a hearing on Robinhood's market manipulation," Tlaib tweeted, referring to the House Financial Services Committee. The company is "blocking the ability to trade to protect Wall St. hedge funds, stealing millions of dollars from their users to protect people who've used the stock market as a casino for decades," she said.

Another "Squad" member, Rep. Ilhan Omar, D-Minn., called for a "financial transaction tax" to even the playing field. "A small tax - 0.1% - on each Wall Street trade would reduce high frequency trading, a practice which drains profits from retail investors and benefits only the very rich. We could use the close to $1 trillion it would generate to cancel all student debt and make college free," she wrote in a pair of tweets.

Rep. Ro Khanna, D.-Calif., celebrated the online revolt. "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," Khanna said in a statement.

He said the episode "demonstrated the power of technology to democratize access to American financial institutions," as well as "how the cards are stacked against the little guy in favor of billionaire Wall Street traders."

Incoming Senate Banking Committee Chairman Sherrod Brown, D-Ohio, said he will hold a hearing about the "current state of the stock market" once he has control of the committee. "It’s time for the SEC (Securities and Exchange Commission) and Congress to make the economy work for everyone not just Wall Street," Brown said.

Rep. Maxine Waters, R-Calif., who chairs the House Financial Services Committee, also said she'd also hold a hearing to probe the stock frenzy "with a focus on short selling, online trading platforms, gamification and their systemic impact on our capital markets and retail investors."

“We must deal with the hedge funds whose unethical conduct directly led to the recent market volatility and we must examine the market in general and how it has been manipulated by hedge funds and their financial partners to benefit themselves while others pay the price,” Waters said.

Asked for her take on the phenomenon, House Speaker Nancy Pelosi, D-Calif., was a little more muted. "It's interesting, isn't it?" Pelosi said, adding, "We'll all be reviewing it."

Sen. Elizabeth Warren, D-Mass., said in a statement Wednesday that the incident shows the system is broken.

"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," Warren said.

In an interview Thursday with CNBC, Warren criticized Robinhood for making users sign an arbitration agreement, and said, “We need an SEC that has clear rules about market manipulation and then has the backbone to go in and enforce those rules.”

Sen. Pat Toomey, R-Pa., said it's "disturbing when retail investors who are simply seeking to buy a stock are frozen out of the market," but "regulators and Congress should tread with extreme caution and avoid needlessly inserting themselves into equity markets.”

Toomey said "like all investment bubbles in history, this will end poorly for the people buying stock late — just as it did for the hedge funds that shorted the stock early. But retail investors should be free to purchase even highly-speculative stocks, just as hedge funds should be free to short them."

The SEC said Wednesday it was "aware of and actively monitoring the on-going market volatility in the options and equities markets."

The White House said that same day that Treasury Secretary Janet Yellen is also "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," White House press secretary Jen Psaki said.