WASHINGTON: US Treasury Secretary Janet Yellen said on Thursday that before she and financial market regulators took any action, they needed to “understand deeply” what happened in the trading frenzy involving GameStop Corp and other retail stocks in recent days.
Yellen, who is convening a meeting of top market regulators on Thursday, told ABC’s Good Morning America: “We really need to make sure that our financial markets are functioning properly, efficiently and that investors are protected.”
In her first media interview since taking office last week as the first female U.S. Treasury secretary, Yellen also argued that a massive federal stimulus plan was needed to overcome the economic pain caused by the coronavirus pandemic.
“We never had anything so large even during the great recession. We need to make sure people have jobs, if they don’t have jobs, that they’re supported.”
Yellen is convening a meeting with the heads of the Securities and Exchange Commission, the Federal Reserve Board, the Federal Reserve Bank of New York and the Commodity Futures Trading Commission later on Thursday.
She told ABC that the regulators would “discuss whether or not the recent events warrant further action,” and added: “we need to understand deeply what happened before we go to action but certainly we’re looking carefully at these events.”
Yellen did not specify what potential actions could be taken by regulators to respond to the situation.
The meeting comes after days of gyrations in the shares of video-game retailer GameStop, headphone maker Koss Corp, cinema chain AMC Entertainment and other stocks and commodities favored on the Reddit social media site’s Wall Street Bets forum.
Retail traders had bid the shares up to dizzying heights in an effort to punish short sellers — who profit when shares fall — forcing some hedge funds to close their positions at big losses. But the so-called “Reddit Rally” has collapsed in recent days, exposing many individual traders to huge losses themselves.
