McHenry: It’s Time That We Get Serious About Equity and Ownership in the American Economy
February 18, 2021 -
The top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), delivered the following opening remarks at today’s GameStop hearing. Republicans will use this hearing as a fact-finding mission to better understand whether the regulatory environment is conducive to innovation, supports the democratization of financial markets, and allows retail investors to fully participate.
Watch Republican leader Patrick McHenry’s opening remarks here.
Read Republican leader McHenry’s remarks as prepared for delivery:
“Thank you, Madam Chair.
“Americans are far more sophisticated, informed, and capable than people in DC give them credit for.
“When I called for this hearing last month, I wanted this to be a fact-finding mission.
“We have speculation, headlines, and finger pointing, but we don’t have the facts.
“We need facts, not just the salacious bits or nasty comments on Reddit. And there’s plenty of that. We need the facts today.
“Now some on the left are already floating “new” restrictions to “protect” these so-called uninformed retail investors who in their eyes don’t know the difference between dogecoin and the Dow Jones without the Congress telling them.
“I think if we’ve learned anything from the past few weeks it’s that these average, everyday investors are pretty darn sophisticated. There is wisdom to the crowd.
“Let’s zoom out on that idea for a moment. The GameStop story represents a larger truth: a fundamental change is happening.
“Like never before, everyday investors can communicate, access more information, and work collectively to move markets—all in real time.
“Technology is fueling this revolution. GameStop is the culmination of years of pent up frustration. That frustration is now paired with faster, cheaper, and better technology.
“Consider for a moment that for every story of someone being able to pay off their student debt thanks to GameStop, or conversely, every story of someone who lost money, there were stories of those who said they were investing in protest. In protest!
“They would gladly risk losing money just to prove a point. And while no one should ever risk investing money they cannot afford to lose, let’s tell the truth of why someone would do something like that.
“The sad truth is, the K-shaped economy is nothing new in our capital markets, because the structural core of our regulations literally enshrined inequity.
“Policies, like the “accredited investor” definition, blatantly pick winners and losers; if you’re wealthy, you’re good to go; and, if you’re not, you’re deemed too dumb to be trusted with your own money.
“So a privileged few get to invest alongside Ivy League endowments, getting early access in private markets to the greatest returns of the last two generations.
“But not so fast for the everyday investor. In the eyes of our government you need to be protected. Protected from your own decisions, protected from your own money, protected from more opportunities.
“So, you are left with a savings account which pays no interest. And if you need more money than that, we created a world where it’s easier to buy a lottery ticket than it is to invest in the next Google.
“Is it any wonder why the unhealthy dynamics of GameStop happened?
“It’s time that we get serious about equity and ownership in the American economy.
“We should live in a world where the construction worker or Uber driver trading on Robinhood has the same access to equity shares in Robinhood itself as the white-collar employee who works there.
“Both contributed to its success. Why can’t both share in its future success?
“I’ll conclude with a reminder for my colleagues across the aisle. In the 80s, Massachusetts state regulators barred its citizens from investing in what the WSJ called “the latest in a cascade of stocks of high-technology companies” that year.
“What IPO was too risky in the eyes of the government? Apple.
“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.
“So, I will start where I began: Americans are far more sophisticated, informed, and capable than folks in DC give them credit for. It’s time our securities laws treat them that way.
“I yield back.”
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