You may have heard about a group of amateur traders who grabbed headlines for taking on Wall Street hedge funds who had made high-stakes bets on the falling price of the GameStop stock. But at the end of the day, the gatekeepers of financial capitalism still profited at everyone else's expense.
When one major hedge fund went bankrupt due to GameStop losses, Citadel Capital Management, an even larger hedge fund, bought them out. At a congressional hearing last month, lawmakers grilled Citadel’s billionaire CEO Ken Griffin. One Democrat said Griffin was "evading [his] question."1
The interrogation of major market players and their pocket-lining practices cannot stop here. While the GameStop story grabbed a lot of media attention, the outcome also reveals the need to take on the wealthy hedge funds that dominate not just the stock market but our economy as a whole. Progressives in Congress are mobilizing to pass concrete policy changes—a Financial Transaction Tax—to address the overwhelming power of Wall Street.2
Sign the petition: Congress and the SEC must impose a Financial Transaction Tax on high frequency trading!
A Financial Transaction Tax for high-frequency trading would make market manipulation less profitable. It would limit firms like Citadel from taking advantage of price discrepancies through algorithms—which retail investors cannot do.
The 0.1% tax on stock, bond, and derivative transactions would raise nearly $800 billion over a decade.3 The revenue produced could effectively end poverty, wipe out existing medical debt, and fund a universal child care program.
Many of the working and middle class individuals who bought into the GameStop frenzy have now lost huge sums of money, and they can't cover those losses the way rich investors can.
Senators Bernie Sanders and Elizabeth Warren support a financial transaction tax in part because it would reduce the amount of speculation we see in the stock markets.4 The GameStop fiasco is just the latest example of how Wall Street gets rich at everyone else's expense—and shows us exactly why a financial transaction tax can end reckless speculation by the hedge funds.
Sign the petition: Congress and the SEC must impose a Financial Transaction Tax on high frequency trading!
Sources:
1. New York Times, "In GameStop Saga, Robinhood Is Cast as the Villain," February 18, 2021.
2. New York Times, "The Trouble With GameStop Is That the House Still Wins," February 1, 2021.
3. The Appeal, "The Case for the Financial Transaction Tax in 2021," February 10, 2021.
4. Wall Street Journal, "GameStop Frenzy Emboldens Supporters of Stock-Trading Tax," March 7, 2021.