Happy Thursday and welcome back to On The Money, which—again—is not a cat. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL—House panel debates GameStop frenzy, trading apps: Democrats and Republicans on the House Financial Services panel sparred Thursday over what, if anything, Congress should do in response to the GameStop trading frenzy and the technology platforms that fueled the rapid rise — and sudden spiral — in more than a dozen stocks.
What didn’t happen: The hearing itself revealed little new information about the forces behind the GameStop rally, the rationale behind Robinhood’s response, or whether it complied with regulations at each turning point of the frenzy. Representatives from Citadel Securities, Reddit and Melvin Capital also faced few questions about their specific conduct and took few hard stances on the future of regulations.
If you were expecting any of that, you’re out of luck for now. Still, the hearing did expose the partisan gulf between lawmakers about how to handle the situation.
Deep divides: Members of the House Financial Services Committee were deeply divided along party lines over whether stock trading applications like Robinhood need to be reigned in after a Reddit-orchestrated short squeeze on struggling companies roiled the market in January.
- “Many Americans feel that the system is stacked against them, and no matter what, Wall Street always wins,” said Rep. Maxine Waters (D-Calif.), chairwoman of the Financial Services panel.
- “Instead of shutting the American public out through new regulations, new forms of taxation, or so-called protections, let’s use this opportunity instead to side with them,” countered Rep. Patrick McHenry (N.C.), the panel’s top Republican.
I’ve got the whole hearing wrapped up here.
What to watch going forward:
- Waters said that there will be at least one more hearing on the GameStop frenzy featuring the SEC and other regulators. That could reveal more information about any potential illegal conduct (or at least investigations into it).
- Democrats are likely to push legislation to boost disclosure into short-selling, bolster capital requirements for brokers, and other measures unlikely to get much Republican support. The SEC will also face pressure to impose new rules itself.
- Lawmakers also said they would keep a close eye on how Robinhood responds to customers who may have lost money because of the stock purchase shutdown.
One striking moment: Rep. Sean Casten (D-Ill.) invoked the story of Alex Kearns, a 20-year-old who died by suicide last year after believing he had accrued roughly $730,000 in losses on Robinhood.
After Tenev expressed his condolences to Kearns’s family, which sued Robinhood, and explained steps the company took to improve customer service, Casten called Robinhood’s helpline on speakerphone as if he were a customer in dire need of guidance.
A brief pre-recorded message encouraged Robinhood customers to reach out to the company with concerns via email before hanging up on Casten.
LEADING THE DAY
Manchin meets with advocates pushing for $15 minimum wage: Advocates in favor of raising the federal minimum wage met with Sen. Joe Manchin (W.Va.) on Thursday in hopes of convincing the moderate Democrat to reconsider his opposition to a $15 an hour rate.
Manchin, who has signaled support for a smaller minimum wage increase, held the virtual meeting with representatives from groups such as the Poor People’s Campaign and Service Employees International Union.
The background:
- The minimum wage increase is one of the most divisive parts of President Biden’s $1.9 trillion COVID-19 relief package that is making its way through Congress.
- The proposal would increase the federal minimum wage from $7.25, where it has stood since 2009, to $15 by 2025.
- Manchin and fellow Democratic moderate Sen. Kyrsten Sinema (Ariz.) have balked at supporting the wage component of the relief bill, posing a critical challenge for Democrats given their slim tie-breaking advantage in the 50-50 Senate.
How the meeting went: Not great.
Barber and others on the call pushed back against Manchin’s opposition to a $15 an hour wage, arguing the dollar amount was already a compromise in that it still fails to meet current costs of living across the country.
Pam Garrison, who earns the minimum wage and is part of the Poor People’s Campaign state chapter, said Manchin’s responses in the meeting were a “cop out.”
“The minimum wage has never been sufficient to feed my family and to survive on,” Garrison said. “If you’ve never lived in poverty, you have no idea mentally, physically, emotionally, what it does to you and wears on you.”
The Hill’s Marty Johnson takes us there.
Yellen urges country to go big on COVID relief: As Sen. Joe Manchin (D-W.Va.) met with advocates pushing to increase the federal minimum wage, other top Democratic officials were making the case for President Biden’s stimulus plan.
Treasury Secretary Janet Yellen argued in a Thursday interview with CNBC that it’s crucial to go big on the next round of coronavirus relief legislation.
“We think it’s very important to have a big package [that] addresses the pain this has caused — 15 million Americans behind on their rent, 24 million adults and 12 million children who don’t have enough to eat, small businesses failing,” Yellen told the network’s Sara Eisen.
“I think the price of doing too little is much higher than the price of doing something big. We think that the benefits will far outweigh the costs in the longer run,” she added, repeating a phrase she has frequently used to argue for a larger stimulus.
The Hill’s Zack Budryk gives us a recap here.
GOP pushback: Republicans are pushing back on Biden’s $1.9 trillion relief plan, with GOP lawmakers zeroing in on potentially hundreds of billions in unspent funds from previous rescue packages.
Republicans in favor of a coronavirus measure that carries a smaller price tag say the combination of unobligated funds and an improving economic outlook mean Democrats need to scale back their ambitions for the latest relief bill.
“It is estimated that approximately $1 trillion in existing COVID-19 funding has yet to be spent,” said Rep. Jason Smith (Mo.), the top Republican on the House Budget Committee.
“Before President Biden and congressional Democrats try to pass trillions more in spending, the American people need, at the very least, a thorough and accurate accounting of the trillions of dollars already approved.”
The Hill’s Niv Elis explains here.
New jobs numbers: The latest debate comes as the Labor Department released new data Thursday showing that initial jobless claims surged to a seasonally adjusted 861,000 in the second week of February, a sign that the labor market continues to struggle to recover from the COVID-19 pandemic. Read more here.
GOOD TO KNOW
- A group of Democrats on the House Ways and Means Committee on Thursday urged the IRS to extend the tax-filing season beyond the current April 15 deadline in light of the coronavirus pandemic.
- More than 100 million workers across the world’s top eight economies may be forced to change occupations by 2030 due to the effects of the coronavirus pandemic, according to a report released Thursday.
- House Democrats on Thursday rolled out legislation to boost tax enforcement on wealthy individuals and corporations.
ODDS AND ENDS
- A coalition of trade organizations filed a lawsuit Thursday against the Maryland state government over passage of a bill that imposes a tax on digital ad revenue.
- Walmart on Thursday announced that it will be raising the pay for 425,000 employees across the country.