Top Biden Official Received Big Bucks from Firm at Center of GameStop Controversy
Treasury Secretary Janet Yellen earned over $800,000 from a hedge fund firm at the center of the GameStop financial controversy, but the White House says that is no big deal.
GameStop, a video game retailer, has been struggling in the online environment, as have many brick-and-mortar stores. Hedge funds had been predicting the stock would drop, and planned to profit off the declines in the company’s stock using a market strategy called short selling.
Enter a group of small investors who united through a Reddit forum to buy the stock en masse, which earned them a massive chunk of cash, cost the hedge funds significant losses and turned Wall Street on its head.
That was fine while it lasted until the stock-trading platform Robinhood stopped allowing GameStop shares to be purchased. The effect of that was to help the hedge funds at the expense of the small traders, spurring calls for action.
Yellen, meanwhile, received $810,000 from the hedge fund Citadel for speeches in 2019 and 2020, disclosure forms reveal. Citadel has been one of the firms at the center of the GameStop controversy because it pumped $2 billion into Melvin Capital, which took a short position against GameStop and needed a cash influx when the video game retailer’s stock surged instead of dropping, according to The Wall Street Journal.
Yellen’s ties to Citadel became fodder for questions at a White House media briefing, during which White House press secretary Jen Psaki said the speeches were no big deal.
Janet Yellen accepted $810,000 in speaking fees from Citadel, owner of Robinhood.
Reporter: Are there any plans to recuse herself from advising the President on GameStop and Robinhood situation?
Psaki: ‘No and she’s an expert and deserves that money.’
— Jessica Grace ? (@IsicaLynn) January 28, 2021
“Separate from the 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 she was paid to give her perspective and advice before she came into office — before she came in to be the treasury secretary, I should say,” she said, according to the New York Post.
Overall, Yellen has made $7 million from top financial sector players since 2018, according to disclosure forms.
Psaki said Yellen was among those “monitoring the situation,” Bloomberg reported.
Many were critical of the situation.
Rep. Patrick McHenry, ranking Republican on House Financial Services, has asked chair Waters for a hearing on Gamestop.
Hearings will certainly happen but we need a bigger investigation at the agency level.— David Dayen (@ddayen) January 28, 2021
The stock market isn’t our economy – it’s a giant casino and playground for billionaires. The SEC needs to clean it up – and Congress needs to do more for working families barely hanging on by their fingernails. pic.twitter.com/3dR7CaktNr
— Elizabeth Warren (@SenWarren) January 29, 2021
There are a lot of things I disagree with Sen. Warren about, but her comments here would sound a lot better coming out of a Treasury Secretary than all the conflict-of-interest issues now popping up between Secretary Yellen and Citadel. https://t.co/1IViv93aRN
— Wayne W. S. Hsieh (@whsieh) January 29, 2021
So Jen Psaki believes there isn’t a problem with Janet Yellen, current secretary of treasury, advising president Biden on the Robinhood/GameStop fiasco despite having received $810,000 from them for a speech. It’s an obvious conflict of interest. Doesn’t take a genius to see it
— sugarplumfairy (@TheJoplinSpider) January 29, 2021
Why is it I hear crickets from MSM about this (besides Fox News)? I would think if this happened under Trump it would be plastered 24/7 on CNN and MSNBC. Just ridiculous. Call Biden amd her out for this! Call a spade a spade! Media, do your job! https://t.co/rlSv6VkNNF
— J M (@niles38) January 29, 2021
The Securities and Exchange Commission also said it is “actively monitoring” the situation surrounding GameStop.
“Consistent with our mission to protect investors and maintain fair, orderly, and efficient markets, we are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants,” the SEC said in a statement.
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