❗Help close the gap: We still need to raise $40,000 by the end of March. Donate now

Just how stable are the U.S. capital markets

Marketplace Staff Dec 8, 2010
HTML EMBED:
COPY

Just how stable are the U.S. capital markets

Marketplace Staff Dec 8, 2010
HTML EMBED:
COPY

TEXT OF STORY

STEVE CHIOTAKIS: The Senate Banking Committee today will look at how to make U.S. capital markets more stable. Sounds kinda wonky, but more stable markets help investors and bankers — and keep retirement money safe for the rest of us. Wall Street reform passed this year was supposed to fix the glitches, like that scary flash crash that caused investor panic earlier.

But, as Marketplace’s David Gura reports, the markets are still not failsafe.


DAVID GURA: If there’s a problem with any of the capital markets, the whole system can fall apart. On May 6, when a big order came in all of a sudden, that happened. The computers couldn’t keep up with the volume. Investors got skittish. And, in just five minutes, the Dow fell almost ten percent.

JAMES ANGEL: When you events that make people doubt the structure and fairness of the market, people get concerned.

That’s James Angel, a professor at Georgetown University. He’s scheduled to testify later today, and he says people don’t understand how complicated the whole system is.

ANGEL: It is a complex network that consists of the exchanges, the brokers, the trading platforms, the technology vendors, the media companies —

The Dodd-Frank Act was supposed to overhaul financial regulation, to heal the whole financial body. Angel says it’s nothing more than “a pile of Band-Aids.”

ANGEL: It fixed a lot of the obvious problems we had in our financial markets, but it didn’t fit the fundamental fragmentation of our regulatory structure.

He’ll share the witness table with regulators today, including the chair of the SEC. Angel will tell the committee regulatory agencies need to cooperate more, or this year’s flash crash won’t be the last.

In Washington, I’m David Gura for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.