Senate to Hold Hearing on Stock Market as White House Defends Yellen Over Wall Street Ties

Janet Yellen, who was later confirmed as Treasury secretary, is seen during President Joe Biden's inauguration outside the U.S. Capitol in Washington on Jan. 20, 2021. Kevin Dietsch/Pool/Getty Images

A Senate panel will hold a hearing on the stock market amid an unprecedented wave of actions taken against investors, an incoming chairman said Thursday, as the White House defended Treasury Secretary Janet Yellen over her ties to Wall Street.

Stocks like GameStop and AMC have exploded in growth in recent days, bolstered by a drove of investors talking them up on a Reddit subgroup. The investors saw Robinhood, an investment trading app, and other companies cutting them off from buying and selling some stocks, prompting fury and a class action lawsuit.

As Republicans and Democrats united in condemning Robinhood’s action, incoming Senate Banking Chairman Sherrod Brown (D-Ohio) lambasted Wall Street and said the panel would hold a hearing.

“People on Wall Street only care about the rules when they’re the ones getting hurt. It’s time for SEC and Congress to make the economy work for everyone,” he said in a statement.

The hearing will deal with “the current state of the stock market.”

Sen. Sherrod Brown (D-Ohio) walks near the Senate Chamber in Washington on Jan. 20, 2021. Zach Gibson/Getty Images

The Biden administration has said little about what’s happening. Three Securities and Exchange Commission (SEC) officials on Wednesday said in a brief statement they were aware of and monitoring the market volatility and the White House said both the administration and Treasury Secretary Janet Yellen are also monitoring the situation.

Yellen received hundreds of thousands of dollars in speaking fees from Wall Street, including some $800,000 from Citadel, according to filings with the Office of Government Ethics.

Citadel has poured money into the hedge fund Melvin Capital, which took a strong short position against GameStop, the primary stock that’s drawn investors through interest on Reddit and elsewhere.

Yellen said in her ethics pledge that she wouldn’t participate “personally and substantially” in any matter that involves Citadel or other entities that paid her to speak unless she receives written authorization.

Asked during a briefing Thursday about Yellen’s ties to Citadel and whether she should recuse herself from advising President Joe Biden, White House press secretary Jen Psaki declined to answer directly.

“To be clear what I said [yesterday] is that the treasury secretary now confirmed. We have a broader economic team. The SEC put out a statement yesterday that I referred to. I don’t have anything more for you on it, except for to say, separate from this GameStop issue, the secretary of treasury is one of the world-renowned experts on markets, on the economy. It shouldn’t be a surprise to anyone that she was paid to give her perspective and advice before she came in office,” Psaki said.

The SEC declined to comment beyond its Wednesday statement. The Treasury Department didn’t respond to a request for comment.