GameStop stock rally gives policymakers opportunity for legislation
Jon Lieber, who leads Eurasia Group's coverage of political and policy developments in Washington, offers insights on US politics:
First question. Stonks! Will the GameStop stock rally result in new regulation on Wall Street?
The answer is probably, but the interesting thing is, we have no idea what form that regulation might take. The interesting thing about this storyline around GameStop is that the run-up in prices, driven by social media chatter on Reddit, against hedge funds who had shorted the stock, opens up a whole can of worms for how you want to solve the issue, and is most likely going to be an outlet for members of Congress preexisting biases. If you want to regulate hedge funds, well, here's an excuse to do so. If you want to implement a financial transaction tax, this is your opportunity. If you're concerned about consumer protection, data privacy, this could be a hook to get into those issues as well. So, this is a headline grabbing event that's probably going to fade out of the news in a week or so, but it's going to stay relevant to policymakers for several more months, could potentially result in new legislation, or new regulation from the SEC based around investor protection and market structure. So, stay tuned. We're going to be hearing about GameStop for a long time.
Second question. What is the future for the legislative filibuster?
Well, as part of the Senate's organizing resolutions, two Democratic senators made public commitments that they were not going to vote to change the legislative filibuster. This is the 60-vote threshold in the Senate to pass legislation. With 50 Democratic members in the Senate, you need all 50 to agree to change the rules. They only have 48 votes right now at the most. This means it's probably not going to happen. Now, these two senators could change their mind down the road, Kyrsten Sinema from Arizona, Joe Manchin, from West Virginia. There's probably a handful of other senators who also oppose changing the rules but haven't done so publicly. The other thing they could do is pass legislation using the reconciliation process, which has guard rails around it that limited to only budget and tax legislation, but change the rules of the reconciliation process, to supercharge their ability to pass legislation with only 50 votes without changing the legislative filibuster. Something to keep an eye on, we expect at least two big pieces of legislation this year to pass through the reconciliation process, giving multiple opportunities to try to change those rules and erode the norms around reconciliation.