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Julie CHABANAS
France Media Agency
“I organize a meeting in the morning with the main regulators […], as well as the Federal Reserve to discuss what happened, ”Janet Yellen announced Thursday morning on ABC, during her first interview as Secretary of the Treasury.
“We really need to make sure that our financial markets are functioning properly and that investors are protected,” she added.
The wind of panic that blew on Wall Street last week prompted Joe Biden’s minister to request this meeting, just days after taking office.
Around this virtual table, will therefore meet the heads of the American stock market policeman (the Securities and Exchange Commission, SEC), and the commodities and agricultural regulator (the Commodities Futures Trading Commission, CFTC).
The American Central Bank (Fed) will also be present, as well as its branch in New York, which closely follows everything that is happening on Wall Street.
“Understand before acting”
However, no decision is expected immediately.
Asked about possible sanctions at the end of the meeting, Janet Yellen kicked in: “we need to understand what happened before acting, but we are watching these events very carefully”, a- she said on ABC.
Elected officials, however, in a rare alliance between Republicans and Democrats, demanded a review of trade regulations. The Treasury, the equivalent of the Ministry of the Economy and Finance, has no power to regulate markets but can influence regulators.
This meeting should make it possible to ensure “the compatibility of recent activities with the protection of investors and fair and efficient markets,” according to the Treasury statement which was published on Tuesday, when the meeting was requested.
The share of video game store chain GameStop had jumped 400% last week.
Behind this astonishing soaring of the title of a not particularly healthy brand hides an army of stock marketers, active in particular on the community site Reddit and followers of brokerage applications like Robinhood, and who have joined forces against hedge funds that have bet on a GameStop collapse.
But professionals have also entered the fray to take advantage of the gains.
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The operation of the New York Stock Exchange as a whole had been disrupted, as had the price of commodities like silver.
This again highlighted the insolent good health of Wall Street, totally out of touch with the current state of the real US economy.
And the role of the Fed has been singled out: to support the proper functioning of markets and credit and prevent consumption from falling further, the central bank flooded the markets with liquidity when economic activity was paralyzed in last March by the COVID-19 pandemic.
The GameStop affair has also shone the spotlight on financial practices such as short selling, which involves betting on the plunge of a stock.
Janet Yellen’s involvement in this matter required special permission, US media reports.
Indeed, before being chosen by Joe Biden to take the head of the Treasury, she had been paid up to $ 700,000 by the investment company Citadel, one of the key players in the GameStop affair, for speeches given at conferences on the economy following his departure as Fed chairman in 2018.
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