Robinhood CEO Vlad Tenev appeared yesterday on CNBC.
He is an absolutely horrific spokesperson for his firm.
The takeaway should be this. The firm did not have liquidity problems because of the trading in Reddit driven stocks but it appears new buying in the Reddit stocks were halted because the broker was probably bumping up against government capital regulations and clearinghouse deposit requirements because of the explosion in the Reddit stocks.
More than one source is telling me that Robinhood drew down several bank lines of credit on Thursday. This was a prudent move to boost capital and exchange deposits and this is why the restrictions on the Reddit stock buying were lifted starting with Friday's session.
Here is Tenev:
Robinhood CEO Vlad Tenev speaks out after the company decided to restrict trading in GameStop and other stocks today. “In order to protect the firm and protect our customers we had to limit buying in these stocks,” he tells @andrewrsorkin. https://t.co/LsJ5iNjJAB pic.twitter.com/yJATy66TcZ
— CNBC (@CNBC) January 29, 2021
The idea that there was some kind of battle between Wall Street and retail investors is pretty absurd. Maybe the retail investors think so but there is a lot more to understand.
I will go into much more detail Sunday on "This Week in Economics with Robert Wenzel". This link to the show will go live at 7:00 AM ET on Sunday.
-RW
Your reliance on the mainstream media hamstrings your ability to comprehend the situation. Either that or you're just a shill. There are numerous references all over the interwebz that Robinhood was overtly strongarmed by the finance/government complex, aka Deep State, to close the long GME positions, which threatened to unravel the house of cards to a far greater degree than LTCM back in the 1990s. A huge, dispersed coordinated short squeeze by people who care more about destroying financial parasites than profit cannot be stopped by throwing money at the problem, when the shorted shares were as oversold and naked as they are in this situation. There was literally unlimited downside for Wall Street. Especially as they started piling into other vulnerable stocks. They had to be forcefully divested of their shares to fix the problem. The idea that this was in response to some sort of simple regulatory issue is laughable.
ReplyDeleteAll these losertarians show themselves to be weak cheerleaders for neoliberalism when the rubber meets the road.
DeleteShim I had the same thought this is an ongoing endemic issue and if you are bold enough to take the shot to out manipulate the manipulators. Enjoy your win fall and call it a day.
DeleteNo sympathy here
Really looking forward to the podcast. Will there be opportunities for listeners to ask reasonable well-formed questions?
ReplyDeleteYes, read this:
Deletehttps://www.economicpolicyjournal.com/2021/01/its-finally-back.html
Robinhood is looking to go public soon, and many late-stage investors include or will include hedge funds which like to get in at pre-IPO prices. I could imagine that the hedge-fund community and the IPO bankers had a quiet word in Robinhood's "ear" to rein in anti-institutional-investor activities.
ReplyDelete