Washington weighing in on market turmoil, looking for answers
President Obama said government officials were looking closely into Thursday's "unusual market activity," pausing as he touted Friday's positive job growth news to express concern about the impact of Wall Street's turmoil and growing fears about Europe's finances on the U.S. economic recovery.
"The regulatory authorities are evaluating this closely with a concern for protecting investors and preventing this from happening again," Obama said of the review announced Thursday by the Securities and Exchange Commission and the Commodity Futures Trading Commission of Wall Street's wild ride.
Also Friday, a key House lawmaker set an emergency hearing next week on the Dow's nearly 1,000-point dive, calling it unacceptable for "a technological error to spook the markets and cause panic."
Rep. Paul Kanjorski (D-Penn.) announced that on Tuesday the House capital markets subcommittee that he chairs will examine what's become known as the "flash crash." Kanjorski wrote to Mary Schapiro, chairwoman of the Securities and Exchange Commission, asking for an explanation of what the agency is doing to examine the problem and to prevent it from happening again.
"While advances in technology have generally benefited market participants, investors need assurances that they will not suffer losses because of technological glitches," Kanjorski wrote to Schapiro.
Responding to reports that the market turmoil was caused by erroneous trades and exacerbated by computerized selling, Kanjorski said that the SEC must find a way to insure market integrity.
"In this day and age and with the use of such complex technology, we should be able to make sure that our financial markets are effectively monitored and investors are protected," Kanjorski said. "We were lucky that the market appears to have caught the error and quickly rebounded. The SEC must examine this important issue."
-- Jim Puzzanghera