Sen. Josh Hawley, R-Mo., said the private investors who initiated the short squeeze on GameStop‘s (GME) stock price, causing hedge funds to suffer major losses, have faced more criticism than Wall Street did for tanking the entire economy in 2008.
“What we’ve seen I think with this GameStop meltdown that Wall Street is having now, these folks at home, these day traders, retail investors, they’ve got more criticism, more scrutiny than the people who crashed the entire financial market in 2008 and they got bailed out, the government bailed out all of those people,” he said.
Yesterday, Robinhood blocked private investors from purchasing GameStop’s stock as Google prevented users on the Play Store from criticizing the trading app in their reviews.
In an interview on Fox & Friends, Hawley said the coordinated actions from Google, Robinhood, Citadel, and other financial and technological institutions shows that “the fix is in” to protect corporate interests no matter the harm to private investors.
Host Steve Doocy said that, just as in 2008, the banks “were too big to fail.”
“Too big to fail, exactly right, and now the big hedge funds, they don’t want any competition,” Hawley said. “They’re fine if these day traders do as they’re told, you know, do what they’re supposed to do but when they get ideas of their own and they bet against Wall Street, well, my gosh, then they’re a threat, then they need to be shut down.”
Wall Street became manic yesterday when private investors—many associated with the subReddit page WallStreetBets and the Discord chat by the same name—decided to force a short squeeze on GameStop’s stock.
Wall Street hedge funds shorted GameStop’s stock—meaning that they borrowed money to bet against the stock’s success.
But when WallStreetBets, in an effort to punish Wall Street, pushed the price from about $20 to more than $300, the hedge funds found themselves owing billions of dollars and, by some reports, lacking liquidity to cover the losses.
Trading was shut down to prevent further losses.
“I just think this shows you that just like we’ve got this concentration of power in so many industries, the tech companies, on Wall Street too the big banks, the big hedge funds,: Hawley said. “They don’t want the competition. They want to be in control.”
