It’s Occupy Wall Street, the sequel. They are again elements of the Tea Party. They are Bernie bros and MAGA maniacs.
The hordes of young traders that this week fueled a spectacular rise in the value of video game retailer GameStop may lack a unified political ideology. But they’ve enforced a Wall Street bill and caught the attention of Washington leaders who recognize a populist uprising when they see one.
Wall Street has long been an easy rogue for many on Capitol Hill. But the rush to side with speculative traders by Democrats and Republicans alike reflects the widespread recognition of the impulses that have driven American politics in recent years, driving both the rise of President Donald J. Trump and a liberal wing of the Democratic. Party that got stronger opposite.
Online brokerage app Robinhood’s decision to impose trading limits as hedge funds were hammered by the wild market fluctuations has led to the rarest of all political events: a two-pronged deal. Lawmakers from across the political spectrum condemned the move and called for hearings on the decision, including Senator Ted Cruz of Texas, a Republican and staunch conservative, and Representative Alexandria Ocasio-Cortez of New York, a flag-bearer of the left. The Conservative Attorney General of Texas and his progressive counterpart in New York have both launched an investigation into Robinhood.
“For years, the stock market has been less and less about the value of things and more and more like casino gambling,” said Massachusetts Democrat Senator Elizabeth Warren, who called for more regulation of Wall Street shortly after the market frenzy was over GameStop began this week.
“GameStop is just the latest and most visible example,” she said in an interview Friday. “We should not view this as a one-time problem, but as a system problem that requires systemic regulation and enforcement.”
While President Biden beat Mr. Trump with a centrist message of restoring political norms, the trade frenzy this week provided a powerful reminder of the country’s strong undercurrent of grievances and institutional distrust. Many believe this will only increase as the nation grapples with the economic fallout from a devastating pandemic.
As Wall Street booms, unemployment has hit record highs with nearly 10 million fewer people in employment than early last year – a situation that reminds some former officials of the 2008 economic crisis that led to both Occupy Wall Street and the United States. Tea Party. movements.
“It’s not about Republicans and Democrats,” said Newt Gingrich, the former Speaker of the Republican House and an ally of Mr Trump. “It’s a lot of normal, everyday people who found out that they really got ripped off in the past year, just like they got ripped off in 2008 and 2009.” He added, “What you see is an almost spontaneous cultural reaction where the little boys and girls come together and go after the big ones, so the big ones have to adapt the game to survive.”
The reality is more complicated. There is little sign of a central political mission shared by the millions of amateur traders who have collected together at least two hedge funds betting against the stocks of companies like GameStop and the movie chain AMC. Far from being a “little guy,” one of the initiators of the plan has the financial means to convert an initial investment of $ 53,000 into $ 48 million. In total, only about half of the country owns a share.
On Reddit, the online site that sparked the wave, few of the mostly young participants put their flow of investment in clearly biased terms. Yet many write that they were driven by anger at the 2008 financial bailouts that kept the big banks afloat while 10 million Americans lost their homes.
“When that crisis hit our family, we were able to keep our cottage, but we lived on pancake mix, powdered milk, beans and rice for a year,” a person identified as ssauronn posted on Reddit. rewarded for horrible and illegal financial decisions that have negatively changed the lives of millions. “
Other posters responded with their own stories of economic struggles and political anger.
“Forget Republican / Democrat, left / right … the bankers play both sides and have almost always come out on top,” wrote a poster identified as ChrisFrettJunior, after telling how his parents struggled through the 2008 recession.
The decision to bail out the biggest banks, and also refuse to sue any of their top executives, sparked much of the populist fervor that has driven American politics over the past decade. The Tea Party gained political prominence in the wake of the $ 700 billion financial bailout package passed in 2008 and eventually became a force that defeated moderate Republicans and Democrats alike.
After Republicans gained control of the House in 2010, Democrats began to face their own backlash, starting with Occupy Wall Street – a loose coalition of largely liberal protesters that sparked a national conversation about economic inequality.
Today, political strategists are warning that hedge funds, private equity investors, and bankers are unlikely to find the same deep support in Washington. Anger at the bailouts fueled the campaigns of political outsiders, creating a Congress less receptive to Wall Street’s pleas and far more eager to tap into unrest to advance their agendas.
“There’s a lot of political currency in it to keep hedge funds down to the fires of Democrats and Republicans,” said Josh Holmes, a Republican strategist and former adviser to Senator Mitch McConnell. “If you’re looking at this on Wall Street and turning people down as people who don’t understand the way the markets work, I think you’re going to have a lot of trouble.”
For Republicans, the market turmoil was a referendum on elitism. Democrats saw pure corporate greed and the need for more regulation.
“Big Hedge, with outposts in South Hedge-i-stan (Wall Street) and North Hedge-i-stan (Greenwich, CT), has created trillions of short positions with major US companies facing a rough patch,” said Representative Jeff Fortenberry, a Republican from Nebraska. “Now they get a well-deserved wage from flash mobs from day traders and pay dearly.”
Most of the anger this week has focused on Robinhood, a brokerage app for younger investors, which suddenly restricted trading GameStop, AMC, and other stocks. Lawmakers argued that the app protected hedge funds and other large investors from private investors. Robinhood said the additional restrictions were necessary to meet the government’s financial requirements.
But even centrists like Pennsylvania Senator Pat Toomey, who is on the cusp of becoming the senior Republican on the Senate Banking Committee, expressed concern about the online company’s lack of transparency in decision-making.
“I find it disturbing when private investors who just want to buy a stock are frozen out of the market,” Mr Toomey said in a statement. “Retail investors should be free to buy even highly speculative stocks, just as hedge funds should be free to go short.”
While politicians from both sides joined the calls for greater scrutiny, it was hardly a kumbaya moment for the two sides.
After Mr. Cruz tweeted that he agreed with Mrs. Ocasio-Cortez’s call to investigate the Robinhood action, she quickly denied any support from the Texas Republican, who was a prominent proponent of Ms. Ocasio-Cortez’s unsubstantiated claims. Mr Trump on electoral fraud.
“I’m happy to work with Republicans on this issue where there are common ground, but you almost had me killed three weeks ago, so you can sort this one out,” she replied. Happy to work with almost any other GOP who isn’t trying to kill me. If you want to help out in the meantime, you can quit. “
Mr. Cruz condemned her response as “partisan anger” that “is not healthy for our country,” and drew another response from Ms. Ocasio-Cortez, while his allies in the House asked for an apology.
The uproar over GameStop and Robinhood comes at a challenging time for the Biden administration, who took office and promised to restore a sense of calm to the country. The Senate Banking Commission has yet to schedule a hearing to confirm Gary Gensler, Mr. Biden’s choice to head the Securities and Exchange Commission, giving the bureau an acting chairman for an indefinite future. On Friday, White House press secretary Jen Psaki postponed questions on the matter.
“It is a good reminder, however, that the stock market is not the only measure of the health of our economy,” she said, a clear reference to Mr Trump’s continued fixation on stock prices during his tenure. Mr Biden has not yet commented on the matter.
California’s Representative Ro Khanna, a progressive representing a district that includes Silicon Valley, said this week’s events should warn lawmakers of the need to tighten financial regulations and increase transparency and fairness.
He said the wide range of Republicans and Democrats who have spoken out reflects “a real populist rage in this country.”
“Some people get a good education, know the right people and spend all day short selling their computers,” said Mr. Khanna. “And it is a form of manipulation that has hurt our country. That has enriched the few at the expense of many Americans. “
While many Americans don’t own any stocks at all, the feeling that Wall Street has played a rigged system over the demographic barriers, he suggested.
“I think this has been bubbling up since the Wall Street crash in 2008,” Khanna said. “And it comes to a boiling point.”