on a per share basis and we do believe that that's the most optimal way to structure payment for order flow arrangements >> okay. it's not the -- is it not because companies like citadel can make more money off of robinhood users than others? and that's a yes or no, because my clock is going to run out >> no. >> i'm sorry i yield back my time is up. >> thank you very much next, we will have mr. vargas. excuse me. no mr. davidson next. and then mrs. vargas mr. davidson, you are recognized for five minutes >> thank you, madam chairwoman i thank our witnesses. i appreciate the work you have done today i want to share 2345 in may of 2020 the depository trust clearing corporation unveiled a working proof of concept kaupd project ion. in this project dtcc said they

would examine the potential use of distributed ledger technology in accelerating the clearing and settlement process since project ion was publicly announced we have received little information pertaining to its progress as a long-time advocate for this emerging technology, distributed ledger technology and blockchain, today i have sent a letter to the dtcc to request that they provide an update on the status of project ion. and i look forward to hearing back from them and hope to include them in our next hearing. mr. griffin, with project ion in mind, could you briefly state what would be your biggest concern if dtcc implements same-day clearing and settlement >> same-day clearing and settlement requires that every bit of the work flow is perfectly synchronized across all parties, and we have no time

for recoverability or for error management that enough an overnight batch process. >> right so the technology makes that essential in my assessment and many that is inherent to the architecture for blockchain to move forward with each -- each proof. and so i guess, clearly, in your business, just to follow up there, the technology exists where, you know, for trading firms that are engaged in high frequently trading you measure success in the course of the day in, what, milliseconds for high frequently trading >> as you know, we are the largest market maker in the world and the largest in the united states in equities. we put great emphasis on the performance of our systems that was one of the reasons that on the week of january 24th we were the only major market center for retail order flow that was responsive every minute of every trading day

>> perfect i just wanted to make the point that i think the technology exists whether you use blockchain or not. and applaud you for having the ability to execute with precision swiftly already. i don't think it is a barrier. i would love to have more dialogue but unfortunately, i have to go to a few others mr. tenev. do you believe that the root cause of january 28th for the problems that you and others experienced were market infrastructure-related, particularly related to t-2 versus t-0 i believe -- thank you, congressman. i do believe if we had realtime settlement capability and if the infrastructure was modernized. we would not have seen similar problems. >> thanks for that i think one of the related thing. it is related to your mission at robinhood, of more democratic access to capital, is not just the ability for more people in a broader portion of america to become savers and investors.

it's also to engage in corporate governance, even so do you believe that if market infrastructure would guarantee -- this is really related to, you know, the over -- you know, musical shares, where someone could be left with no share when the music stops, multiple claims on a shorted stock. if the infrastructure could guarantee that investors could retain custody of their shares so their shares can't be lent to short sellers, how do you feel >> congressman, i believe that that's an important question it's one that robinhood and me personally have engaged with i do believe that the ability for the same share to be shorted an indefinite number of times is somewhat of a pathology, and that should be fixed i think step one of that is

modernizing the antiquated settlement infrastructure that everything is built on we simply don't have the ability to properly track what shares have been shorted and how many tides as they are moving through our settlement system currently. >> thank you for that. i get -- i appreciate that you see the relationship hopefully broadly, we do and we provide that nudge the market needs. i want to commend vice chancellor travis laster of the -- for his letter the blockchain plunger that explains how this can be done i ask unanimous concept to submit that to the record. as my time expires i want to commend you mr. gill for providing a large swath of the ma market is available to more people >> the gentleman's time is

expired. and without objection, your submission is taken. thank you. mr. vargas you are recognized for five minutes. >> thank you, madam chair. first i want to -- to mr. plotkin. you spoke of the anti-semetic attacks that you suffered on line as a important of color, i always feel the need to confront hate speech and speak out. i don't think there has ever been a more hateful, evil, sinful event in human history than the holocaust so i want to apologize to you and your family for those attacks. you brought it up. i think we owe you an eye poll gee. i want to apologize for that sometimes i think some of my colleagues on the other side of the aisle are devoid of any contact with real people when they say this is just political theater or they don't want to know the rate of return when that's exactly what people want to know. in fact, there has been a great deal of interest in this hearing i think it is because there is

great distrust in our society, in government, markets, institutions then along comes this story of game stop. and it is a story, really, of robinhood turned on its head and the reason i say that is mr. -- [ indiscernible -- brought it up robinhood is is an english folk hero, 13th, 14th century and he was supposed to -- robin of lockly was supposed to steal from the rich and give to the poor here you almost have the opposite you have the situation where you have the steal from the small retail investor and given it to large institutional investor from an outsider's perspective you have the lobbies of hedges and their lawyers and armies attacking game stop by shorting the stock. to its rescue here comes the retail investors they are taking stock to these incredible levels. and all of a sudden steps in,

but not to help the little guy he steps in and says, i'm going to help the big guy, and stops the sale because no one knows how high this is going to go and who is getting it? who is getting socked in this thing? the bullies are, the hedge funds. that's why people were excited about this all of a sudden robinhood steps in and said no, no, we had to do this because of other conditions republicans say it was government, you know, it was because the government regulations forced them to do this that's not what the public thinks the public thinks there was collusion, the big guys were figuring out how to do this and ultimately come out ahead as you always do. it seems my colleagues on the other side want to help people mr. griffin, how many people are in the room with you just count how many people in the room with you. >> there are five people, including myself, in this room,

sir, congressman >> thank you i don't think my colleagues need to help the ceos or anybody. they have got plenty of help now, i have to ask this. you said that you didn't talk to anybody, citadel, citadel securities did anyone in your organization, since january 1st, contact robinhood? >> are you asking if we have had contact with robinhood -- >> with respect to -- with respect to game stop and what we are obviously talking about. >> so, congressman, we offered to have my colleague who manages that relationship be here today instead. he has firsthand knowledge we of course are talking to robinhood routinely in the ordinary course of business. we manage a substantial portion of their order flow. >> i understand that but did you talk to them about restricting or doing anything to prevent people from buying --

not selling, but buying stock in game stop? >> let me be -- >> anybody in your organization? >> let me be perfectly clear absolutely not >> so if we depose everyone in your organization, we will find that >> that is correct >> okay. thank you. i do want to ask with you thing. mr. sherman was pursuing that. how do you balance the best execution with your order flow for your franchise from robinhood for the need to profit from the purchase order flow how do you do that >> so, as a market maker, we have to provide to the customer a better price than they can achieve on exchange. order flow is routed to us on the merits of the execution quality that we provide in contrast to our competitors, who we are competing with.

>> okay. my time is about to expire, but i have to say, when -- mr. tenev when you say that -- has made $35 billion, and you don't say it so much your people lost on home stop people investing in you, that's like taking the fifth. thank you. >> thank you the gentleman's time has expired. mr. bud? >> thanks, chair >> mr. bud is recognized for my minutes. yes. >> yes, ma'am. i want to thank the panel. i want to care about a level play for retail investors to access the market and i have been a long sporter of financial innovation and intech and the shared goal of democrat advertising finance and making access to the financial system easier for all so mr. tenev your company boasts it is helping to democrat advertise finance at the forefront of

innovation talk about what robinhood is doing to push innovation forward and create a level playing field for all retail investors and at the same time making sure those investors are well informed? >> absolutely, and thank you for that important question. the first thing i should note is many of the witnesses and representatives here have stated that it's never been a better time to be a retail investor in america than it is right now i think the combination of zoe commissions, no account minimums, fractional shares, really things that robinhood has helped make the industry standard have helped small investors and helped level the playing field for people to participate in the markets over the past year, robinhood has released fractional shares, the ability to do automated dividend reinvestments recurring investments, so you could take $1 or $5 and create a

habitual investment into a particular stock and the theme of this year for robinhood is how do we take a first-time investor and turn them into a long-term mutual investor how do we make long-term investing accessible for people around the country and we are making huge investments in education and customer support to support that we recently released a revamped learn portal we call it learn 2.0, with the aim of taking a customer from basic concepts such as what is a share, what is a stock, what's an etf all the way through to more advanced concepts and we are continuing to invest more and more on learn as well as on snags, custom is our popular podcast, and all other forms of content thatry we distribute last year, more than 3. million -- >> i want to interrupt you

there. i know you have a lot more things these are great and we can probably talk a lot longer than this i want to shift gears buy want to keep talking about the retail investor and i want to switch to ms. shut there was an article that you wrote prior to the event we are having the hearing on today. in the article you said that it is inappropriate to refer to these very retail investors that we are talking about that are using these platforms like robinhood that we are talking about and referring to those investors as dumb money. i think that's insulting and my colleague from across the aisle from connecticut used that term. i think it's insulting instead, retail investors are in fact revolutioning the market. could you elaborate. >> retail investors are often referred to as dumb money by wall street. and it is because they don't have access to the same level of

research and some use the term because they think retail investors make dumb decisions. i think it is insulting. i think the term needs to go out the window retail investors are investors who make their decisions based on the information known to them and we should focus on educating people so that they can understand the risks and rewards of investing here i think the game stop situation is proof that the retail investors are revolutionizing the market no one would have guessed when i wrote that article in december that retail investors were going to initiate a sophisticated short squeeze. i think the retail investors here are learning -- learning by doing, which is one the best ways to learn. and we should spend effort making sure that people are equipped with the knowledge to understand the risks about being in the market. >> i appreciate that and i would

like to ask for your unanimous consent to invert that letter into the record, madam chair. >> so submitted. >> thank you i want to look -- robinhood wrote about the need -- this is open to anyone i have just got a few seconds left but i would like for someone to talk about, is it possible for clearing houses and realtime settlements on the blockchain to exist? i don't have time for that, but that's something we can come back to at a further point madam chair, i would go ahead and yield back. >> thank you very much without objection, i want to make sure that that's on the record that your insertion was accepted thank you. with that, we will turn to mr. got himmer you are recognized for five minutes. >> thank you, madam chairwoman and thank you to our witnesses for being here today before i begin, mr. gill, i read your testimony and i would like

to offer my heart felt condolences for your losses last year every day retail investors were left holding the bag after game stop's stock fell back to earth. not every investor lost money. still bloomberg was served a lawsuit accused of misre misrepresenting himself and his motivations. i am not here to take sides, but it raises questions about the role of social media website, especially in the volatility we experienced with game stop, amc and numerous other stocks last month. mr. huffman, what kind of indication exists for reddit users to confirm their identities to confirm they are even real people >> reddit -- this is an important quality of reddit, thank you for the question doesn't require people to reveal their full identity to use the platform one of our pillars of privacy, something that's critically important to us is that users

should be masters of their own identity and check choose to reveal as little or as much as they will like i would point out there are two sides of this their really important. on one side this allows reddit to work. something like wall street bets would not exist if users had to reveal their full identity because they are revealing gains and losses, their effectively revealing their financial position approximate life. i would point out that other platform versus real identity and it doesn't do anything to improve their behavior. >> that was the question -- is there way for a regular user of wall street bets, subheaded to know what content is genuine, written by other users just like themselves, retail investors looking for honest information to invest on >> there are a couple of aspects to this, the first is that we as a company invest significant resources in enforcing the versity of our voting system it is something we have been doing 15 years, long before events like this, long before

even the election and the politics of the last few years where these things have become top of mind for everybody. this has been critically important to us. also our user base is exemptionally good at sniffing out untruths, misinformation, fake stories both within this commune and reddit at large. in order for any piece of content to be successful on reddit it has to be accepted by that community and receive the same votes that anything else would. >> do you have heightened standards for places like wall street bets or other investing subreddits where people are able to manipulate content to their financial gains? >> we keep a close look across the the entire site. to date, we have not found any nefarious behavior. >> got it. but we could have a situation where thousands, possibly millions of dollars of retail investor money may be being manipulated.

we don't know that >> people in the united states talk about stocks on reddit, they talk about it in tv, in magazines. people can day, they do on television encourage people to make bad investment decisions. reddit i think is among the best because it has to be accepted by many thousands of people before getting that photo visibility into do you see any difference between someone on reddit offering advice versus an analyst at a major bank or a financial services firm? >> absolutely. i think on reddit you are seeing retail investors who are giving authentic advice based on their knowledge. and you would not call into question what their motivations are or what large positions they may hold before going on tv and talking about them. >> do you plan to do more in this space is this going to be a major priority of yours? do you think overall social media companies like yourselves should be held to a different

standard should you be responsible for what happens in your content you know, if someone minute lates something or if it is a bot, should that be on you or is that just buyer beware. >> we take manipulation of reddit incredibly seriously. that is one of our i think first duties in all of this is to ensure the authenticity of our communities, yes >> but do you think you should be held responsible if someone minute lates something it is a button line do you think you should be on the line or is this a site you offer for people to exchange ideas? >> reddit can be held responsible. and we do take our responsibilities here incredibly seriously. >> thank you the gentleman's time has expired. >> thank you madam chairwoman. >> mr. gusoff. >> thank you i want to thank you and the

ranking member for convening today's hearing. if i could, mr. tenev, i would like to echo who many of my colleagues have said today we do appreciate the fact that you created this platform, to a large extent you have leveled the playing field so that small individual investors can have a shot at the american dream that's -- that's investing i do want to ask you, know, and a lot has been said about the situation that occurred in late january. high question to you is how did you misjudge your capital requirements to prevent people from bag able to trade during that period in january >> unk, that congressman i wouldn't say we misjudged our capital requirements thft a 1 in 3.5 million occurrence event one that had never been seen before in capital markets.

and we had to play this by the book robinhood securities made the decision that we did so that we could remain in compliance with our regulatory capital and deposit requirements unfortunately, it required us to restrict the buying of these securities for thursday and limit it to some degree on subsequent days until additional capital came in that allowed us to relax the restrictions. >> it was robinhood's mistake, though, correct? >> well, robinhood owns what happened, certainly. and we need to make sure that it doesn't happen again but robinhood really -- robinhood securities had limited options with how to address this and i fully support the team in making the decision that they did. and i believe they did the right thing and the only thing. >> i realize -- you said at the

beginning that you are privately held with that said, is your primary source of revenue from the order flow payments that you received from some of the players we talked about today >> that is correct, congressman. payment for order flow is one of our largest revenue sources. >> is it the largest >> it's the largest, yes. >> now, in your testimony -- in your written the, oral testimony. you talked about the settlement period and what we are probably capable of doing in realtime instead of, the plus 2, make it t plus 1 if we had realtime settlement would the situation have occurred that did occur in january, would that have been preventable? in other words that wouldn't have happened if we had realtime settlement >> congressman, if we were to have realtime settlement and of course there are some implementation details that would govern this, there would

be less of a need for collateral at clearing houses because the cash and securities transactions would be exchanged in realtime so similarly for counter-party risk would be less necessary realtime subtlement would lead to reduction, perhaps an elimination in some of these collateral requirements. a reduction in the money that is sort of clogging up the plumbing of the system. and that would have avoided some of these problems altogether >> thank you very much just to be clear, does the same answer apply if i asked you if settlement was t plus 1 instead of same day settlement would your answer be the same? >> congressman, t plus 1 certainly would be -- would be better, but it doesn't -- it reduces the scope of the problem it doesn't eliminate it from a technology standpoint. >> thank you very much

mr. -- if i could, i would like to follow up on some of the questioning my colleagues congressman hill and congressman gotten himmer asked. you have done an investigation into reddit and into wall street bets you don't see any bad actors -- i am paraphrasing, but you don't see any bad actors that caused any role in the game stop frenzy aim characterizing that correctly? >> congressman, that's right >> you know the congress is looking at amending section 230. what are your thoughts about that as relates to reddit? >> sure. section 230 i think is a critically important law to the internet as we know it it was created, in fact, to protect a forum in the early internet for talking about stocks section 230 i think it is also important to point out doesn't protect platforms or companies like ours from civil litigation.

what it does protect is our ability to evolve the way we moderate our content, which we have done in many ways in the last decade. >> the gentleman's time has expired. mr. gonzalez, you are recognized for five minutes >> thank you madam speaker, and ranking member i want to thank everyone on the committee with us here today mr. griffin, citadel violated regulation sho citadel is now involved in another short telling problem. and robinhood routes half of its customer orders to you robinhood promotes buying positions that you are long on and you owned the hedge fund and the clearing broker. what is there to prevent from you taking advantage of that situation and making sure you profit off the confusion and retail investors >> congressman, i'm trying to understand the question.

>> let me give it to you again in 2020, citadel violated regulation sho which governs short selling. citadel is now involved in another short selling problem. and robinhood routes half of its customers to you and orders to you. robinhood halts buying on a position that you are long on. and you own the hedge fund and the clearing broker. what is there to prevent from you taking advantage of that situation and making sure you profit off the confusion of retail investors >> so, in no particular order, i just do not understand the reference to us owning a clearly broker we do not own dtcc we do not control dtcc we are not -- we are not party to the discussion, dialogue, or demands between dtcc and

robinhood. so i -- i do not understand the premise of the question because we have literally nothing to do with dtcc other than being a member of dtcc for providing settlement services for us and for doing realtime trade affirmation and clearing now, citadel securities owes a duty of best execution for every order that comes from robinhood. and i will tell you that i am incredibly proud of how seriously my team takes that duty of best execution some of the most earnest, hard-working and thoughtful people that i have ever met in my life work on our retail execution business here at citadel and take great pride in the execution quality that we give to each and every trader,

not only at robinhood, but at every single one of the retail -- >> thank you thank you for your response, mr. gill but i understand that you made your decision known on game stop as far back as 2019 and are lotted as a diamond hands hero by wall street bets community. have you ever previously experienced or observed the type of restrictions robinhood and other applications performed on january 28th >> thank you congressman no, i have not >> thank you and mr. huffman, i am not a reiditior, but i do understand the problems around social media and freedom of speech and the tightrope act that goes on where these intersect. in the near decade of bets and subreddit, have they found themselves to be exceptionally problematic forum or one of the many eccentric communities that call reddit home >> congressman, i think your

latter description is more accurate they are an eccentric community but they are well within the bounds of our accepted communities. one of the things we look to first is whether the community is trying and putting their best efforts to be a good citizen of reddit towards that end we have had consistent communication with the moderate ice of that community and they have been doing i think an excellent job. >> the last financial crisis was caused when we turned a blind eye to the bad practices of our financial institutions perhaps today we have seen a warning about the clearing process. and i hope today can be a jumping off point for us to take a hard look at our markets and the practices of these institutions in a two-day clearing process the liability risk and potential -- stress limited trading. in a key timing market -- so i

am hoping that we all get to take a closer look at what is happening. and with that, i yield back. thank you. >> thank you very much next on our list, we will have mr. hemsworth for five minutes. >> thank you madam chairwoman. mr. griffin, i am going to direct my questions to you specifically, but i am hoping to talk a little more philosophically about the market at large rather than just citadel itself there have been evidence -- through sophisticated infrastructure and technology bid ask spreads dereesed from 3 cents to less than a penny over the last five decades. according to some research research saved retail investors $1.6 billion just in the first six months of last year alone. none of the questions after this and the discussions after this are intended to be pejorative

given that reality but i wanted to pick your brain given implications of off exchange trading specifically we have seen this year that off exchange trading eclipsed nearly 50% of all trading can you talk a little bit about what factors contributed to off exchange trading's growth versus on exchange trading? certainly i want to talk about the concerns we may have as market participants about that but first just the factors that you think are driving that. >> i think one of the most significant drivers of off exchange trading is that exchanges are handcuffed in their ability to fulsomely compete. >> can you talk a little bit more about that? is this just regulatory arbitrage? >> i hate the word because it has a negative connotation i believe the exchanges should have greater latitude in setting their sizes in the most liquid securities that will allow order

flow that's currently going to dart pools to go to exchanges and to receive bev execution let me just be very clear. it's not that we want to inhibit dark pools or market makers like citadel from competing. >> right. >> it's that we want to enable and empower he can changes to be better competitors i started my career as a retail investor in the day where i used to spend 25 cents in a bid ask spread if i was lucky. i know the days you are referring to we've come a long ways but to continue on this journey, the next step is to allow exchanges to be more competitive in the market. >> so i think you answered this question, but just to put a fine point on it, there is public policy work that needs to be done in order to help resolve some of this challenge that exists in the movement of volume from on exchange to off

exchange that's incumbent upon us, regulators, to find a better solution is that what you are saying? >> congressman, i am saying yes, it's legislators or the s.e.c. i believe much this can be done by the s.e.c. as a policy matter. >> right. >> think of it as the next step forward inning arelation nms. >> thank you i want to highlight this further. can you talk about some of the challenge os deleterious impacts on the market if more and more volume is off exchange versus -- trading? can you talk why we need to be concerned about that so we can understand how important it is to make these changes to empower compe competitors? >> three points. first, price discovery is the most important part of our capital markets function price discovery combined with liquidity fuels your free enterprise system. it's how companies raise

capital. it drives down the cost of capital. the more trading on exchanges, the better the price discovery we have. that is good for our capital markets. the second is that dark pools are often willing to engage in business practices where they discriminate against one class of investors versus another. i find it very unsettling that we in any way prohibit discrimination against one group of investors to the benefit or at the expense of another. we want our capital markets to represent the values of our country. the third is that the dark pools themselves create a level of concern and apprehension about the integrity if and fairness of our markets. i believe we should always be taking steps to advance public confidence and the confidence of retail investors, and ins constitutional investors that the united states capital markets are a fair place in

which to transact business. >> mr. griffin thank you for those answers. i call upon my colleagues to recognize the deep experience mr. griffin has in these areas and recognize that we take the steps either via agency or via legislation to help empower exchanges compete on a level playing field and create a [ indiscernible >> the gentleman's time expired. mr. lawson, you are recognized for five minutes. >> thank you madam chair, to you, and ranking member henry for this forum today and i want to thank the -- welcome the panelists to this great forum. one thing, madam chair, i wanted to clarify for the record, is one of my colleagues earlier said when people got their stimulus money they went and started investing it i wanted to let them know when my people got their stimulus money they was trying to pay

their rent and take care of their kids and i don't want the panel to think that we worked so hard on the stimulus dollars that that happened that people were running out to invest their money. that's not the norm. my question, i want to direct it to ms. plotkin wall street is supposed to be tied to revenue and profit fundamentals we saw these fundamentals change when amateur investors gained control. they publicly stated that this isn't about investing based on their fundamentals, and that this isn't an investment about making a profit in that way. it is about making a profit to demonstrate that they can manipulate the statement, and if not, better than professionals such as yourself the -- wall street was losing

billions of dollars. melvin capital betted against game stop on the verge of their groups clearly there is mistrust in the system and inequality in american finances. mr. plotkin, do you believe there is manipulation, distrust and overall inequality in american -- within american finance? what do you believe are the consequences of big guys like yourself, but also little guys in this process? >> well, thank you for the question, i wrl can't speculate in terms of the broader market melvin's focus is on building a portfolio and a strong organization you speak of a much greater area in society and it is not my area of expertise. >> okay. you have series 6e, 7 licenses

and everything, but these amateur investors don't have to go through those same standards. because they don't have to go through those same standards, how are they able to go in and manipulate the market? maybe someone can answer, all the people who have been involved, this research and calculation as investing so many years, can anybody answer how are they able to go in and cause billions of dollars to be lost and manipulate. >> sure. as we spoke of today, financial markets are changes. there is a lot of new players. i think they saw the opportunity to drive the price of the stock higher today with social media and other means, you know, there is the ability to kind of collectively do so that was a risk factor that up until recently we had never seen sometimes with retail investors -- they have been adept at investing in the internet or software stocks or

electric vehicles. and ideas with big opportunities, and they chase them because they believe in the fundamentals i think this was different in that a lot of the meme stocks, these are businesses with real challenges but they exploited an opportunity, you know, around short interests in the way that was approached i think us at melvin will adapt and i think the whole industry will have to adapt. >> i understand that and so i, from our standpoint -- i don't have much more time but what do you recommend to us to try to keep from letting this happen again >> look, i think to some degrees markets are self correcting. you know, i know moving forward stocks -- i don't think you are going to see stocks with the kind of short interest levels that we saw prior to this year i don't think investors like myself want to be susceptible to these type of dynamics i think there will be a lot closer monitoring of message boards with the software

providers. we have a data science team that will be looking at whatever legislation you come up with we will abide by and i look forward to helping if you want to have future conversation about that. >> thank you madam chair, my time is running out. i yield back. >> thank you very much mr. gonzalez of ohio you are recognized for five minutes. >> thank you madam share i wanted to thank ranking member mchenry for calling this meeting today and also madam chair you for bringing us together i want to walk through a series of events from that day in january just to make sure we are all on the same page n. your testimony you mentioned that the automated deposit requirements from dtcc came in at 5:11 a.m. eastern and showed a $3 billion deficit, correct >> i believe that's correct, yes. >> at that point, 5:11 a.m., did you have the liquidity to meet the additional $3 billion

deposit requirement? >> so, as we wrote in detail on -- in my written testimony, there were -- there were a series of steps that -- >> in the interest of time, at that exact moment, did you have the liquidity for $3 billion, 5:11 >> at that moment we would not have been able to post the $3 billion in collateral. >> you said before you did not have a liquidity program at that moment in time that was not true, correct, you had to take steps to get there? >> congressman, we did have to -- the robinhood securities team had to work with our relevant clearing houses to adjust the risk profile the trading day in order to meet our collateral requirements. >> right and in order to do that, your

choice was to throttle trading to prevent your clients were being able to purchase in certain shares, correct? >> that's correct. robinhood securities had to restrict buying in about 13 securities >> okay. if you had not been able to derisk the profile -- or the portfolio, excuse me -- you haven't have been able to raise the money, get the var requirement and the excess capital to derisk the portfolio then dtcc would have stepped in and liquidated the portfolio, correct? >> i'm not sure what the -- congressman, what the exact steps that they would take if we weren't in compliance with the deposit requirements would be. but it would not have been a good situation for the firm or the customers. >> so reclaiming my time so the letter that ranking member mchenry submitted for the

record i would draw everyone's attention to i will read this if a clearing member fails to satisfy a margin called exposes other clearing members to risk can put nfcc out of compliance in the event of non-payment nfcc may liquidate its clearing portfolio. so that wasly in the cards for my constituents who are robinhood clients, what would this have done to their portfolio if it would have been forced liquidation as a result of missing the capital call? >> oh, well, congressman, if there was forced liquidation, at the very least, it would have resulted in a total lack of access to the markets for your constituents not just to the 13 securities that we restricted buying in >> right so this would have been an enormous catastrophe for robinhood, correct, and the clients? >> that's correct. and not just robinhood, but the

over13 million customers that we serve. >> yeah. and i think that's really sort of the crux of the issue n. a sense i love your company because it does, when correctly managed, provide investment opportunities for individuals who are currently frozen out of the markets for one reason or another. at the same time, though, i believe a vulnerability was clearly exposed in your business model. and perhaps in the regime that governs your capital requirements and we just can't live in a world where my constituents could have their shares liquidated without their consent because you all aren't able to make a capital call. i appreciate that you were able to ultimately satisfy it but the amount of time you have from 5:00 a.m. to 10:00 a.m. to figure this out is scary for the company, and frankly, i care more about my constituents than anything, and scary for them and so i hope we will continue to look at that. beyond that, though, i also hope that just hearing highlights of

very real problem with our financial markets today and how they are accessed by everyday investors. today the melvin and citadels of the world as well as major pe and ve funds have access to the greatest investments on the planet, whereas the retail investment world of which mr. gill is a member doesn't, has access to an every diminishing world of securities. we need to explore our abilities to -- >> the gentleman's time has expired. mr. san mick oels. >> good morning from guam. it is always a pleasure. i wanted to begin by

congratulating everybody who made money on the robinhood trade. you found a low float low v massively shorted stock and you squeezed it. i think some money managers doubled down on their short positions thinking they were going to win and in the end the massive communication networks we have these days rallied the small to beat the large. that was absolutely something to behold and robinhood made that possible robinhood made that possible mr. tenev you mentioned in your testimony that you secured $3 billion in funding to address the regulatory deposit situation that you faced where did that come from >> thank you congressman for that question. to be clear, we were in compliance with all regulatory net capital and deposit requirements without the additional capital infusion. it was simply to provide extra cushion, allowing us to

unrestrict trading and be prepared for other black swan events that might happen in the future the capital came from mostly existing venture capital investors that robinhood already had. >> so basically, you had to further dilute your position in robinhood to make sure you secured all of the 14 million customers with that additional $3 billion >> that's correct. >> that's where i have a serious concern, mr. tenev because not only was our business model designed to profit off of order flow, which caused you to take extraordinary risks in having 13 million customers with access to large margin trading that facilitated the game stop situation, but you halted buys on that stock, and you allowed sells in order to mitigate the capital requirements situation, and you materially benefitted from it. you materially benefitted from

it because it reduced the amount that you would have had to go and raise in additional capital in order to prevent these kind of crises from reoccurring you took from your customers in order to minimize the $3 billion from being larger than it probably would have been because you wanted to protect your position and that -- that is very troubling. that is very troubling it's very troubling that the order flow model that you built and the risk that you took on resulted in that halt. and it's very troubling that that halt also materially benefitted the existing shareholders and yourself by minimizing the amount of additional capital you had to raise in order to prevent that from happening again you basically took from the shareholders in order to do that that's just -- i don't know what

to say about that. but i think that this, madam chair, presents a very serious situation where we need to ensure that companies are not taking advantage of customers in this way mr. tenev, you are quoting as saying in this hearing buying increases capital requirements, selling does not so it was something that you knowingly did. it was something that you knowingly did. it was beyond just trying to protect the existing customers and it -- at the end of the day, while you had to raise an additional $3 billion, it minimized that from being a larger sum we have customers who purchased a stock who are now bag holders after the price came down because they couldn't continue to go up with additional buying. and that was -- that was willful. that was intentional

so i'm glad, madam chair, that we've called this hearing. i am glad we are able to put these things on the record and i am just very, very concerned with the implications of this. and i only hope that at the end of the day those bag orders get a lot more than an apology thank you madam chair. and i yield back >> mr. rose. you are recognized for five minutes. >> thank you madam chair and thank you ranking member mchenry for holding this important hearing today. and thank you to our witnesses for your testimony and part peyton position today and for the dedication of time that you have made to this hearing. there is still so much for us to learn from this market even. obviously, speculation has been rampant. and i believe we should not get ahead of our skis, so to speak, and rush to policy recommendations before we understand the full scope of

this situation the committee investigation is barely underway. and i would view a large majority of the policy proposals suggested "today" half baked at this point at the end of the day, we should all want -- we should all want retail investors to have access to the market and to ensure they have the information they need to participate in the market in an informed way. mr. griffin, my colleague representative -- asked you to explain the advantages to cutting down on the settlement time but you were cut off before you could finish your thought there? >> to be brief the issue of going to realtime settlement is everything has to work perfectly in a world where there are still people involved in many of the processes we will get there one day as an industry i just think it's a bridge too far in the next couple of years.

>> then you were also cut off earlier when answering my colleague, ms. beatty's question regarding the difference between payment for order flow for the options market versus the equities market. would you like to continue that explanation? >> i think we covered that reasonably well. i think the salient difference is that the options market, every trade must take place exc in the equities market the current market structure has been arrived at with the blessing of the s.e.c. as the best way to give retail investors in america price improvement as compared to the exchanges. and to be succinct, we should make exchanges more competitive, not make internalization or dark pools more privileged. >> thank you

and then finally, mr. griffin, earlier representative blik myer asked to how we got to where game stop was short sold to 140% given that naked shorting is an illegal practice, how did we -- how did that happen given unit -- >> clearly a number of the purchasers of the short sales, of the shares sold short are institutions that also lend their securities and it is very important to remember that institutional investors earn substantial returns from participating in the securities lending market. so if you were lending your game stop stock out for example, over a period of the recent crisis you may have been earning an annualized rate of return of 25 or 30% on the shares that you lent out that accrues to the benefit of pension plans, of etfs, of other

pools, institutional lending that participate in the securities lending market. and keep in the back of your mind, when a bank lends money to a business, that business may turn around and lend money to its suppliers. just because in some sense somebody can unlend what they have bought doesn't necessarily mean something has gone wrong in the chain itself >> would you see that as an area ripe for regulatory adjustment or do you think that that's not a problem? >> i think if we were to think about legislative priorities to make our capital markets work better, this doesn't make the top 100 list. >> thank you thank you. despite the intense volume and exposures presented in the markets, the broader infrayou are have of our financial markets has performed very well, i believe. my concern, like those of my colleagues, is that forging ahead with new regulations at this point would be harmful and

have unforeseen consequences in the few moments that i have left, ms. shut can you speak to what the potential dang remembers of increased regulation to retail investors. >> that's going to take me more than 12 seconds. but there is a lot of potential for unintended consequences here increased regulation can drive retail investors out of the market it can have them have less good prices >> sorry not to give you more time maybe one of my colleagues will give you a chance to complete that answer. i yield back >> thank you very much next we will have ms. actionny, for five minutes. >> thank you chairwoman, and thank you to the witnesses for being here today i just want to quickly follow up with a question my colleague mr. foster asked earlier to you mr. tenev, you said that rule 606

reports detail the arrangements you have with firms like citadel. however, those only detail the payments you receive are you saying that you are prepared to publicly disclose the detailed terms of your payment for order flow with citadel and other market makers? >> thank you for the question, congresswoman. the 606 reports do publicly detail the payment for order flow arrangements we have with citadel securities and our other market makers. >> okay. well i will look forward to seeing those details then. will you make sure that you get those over to our committee? >> certainly we can have that arranged. >> >> okay. thank you. last month as we saw the volatility with game stop and amc and the stocks started to rally, everybody seemed to get involved, and one survey recently said that 30% of americans purchased one of those viral stocks that includes people like my nephew and his two friends who

stayed up until 4:00 in the morning to see if they could get a piece of this action one of the most concerning pieces, though, of this whole episode is how many people really felt like that's what they needed to do to get ahead to me, this just exemplifies the income inequality across america, and it's one that we need to deal with. and i do appreciate the opportunity for retail investing. i want to make sure that it creates a good outcome, however, for the people who are using it. right now, what i am seeing is gambling on the stock market and it's not a real solution to that income inequality and i don't think we should pretend that it is just last june, when hertz declared bankruptcy, after that, robinhood was actively pushing the stock on its site. it was trending on robinhood and the promotion of that worthless stock i don't think is good for investors that's a gamble that they shouldn't have taken that's just one example.

but people having access to the stock market is nice but if they don't have the money to invest, then, really, it is not democratizatioatdemocratiza. and that's the real reason why 80% of the stock market is owned by 10% of the people of course those are the people who don't have to put all of their money into health care or child care or a car payment o, you know, whatever it is that's just keeping them going in their day to day earlier, mr. tenev, you said you couldn't tell us what your cleepts' general rate of return is generally, a large percentage of traders underperform the market. -- i want to ask you you have invested significantly in behavioral research just so you know, i own a digital design firm with my husband. so i am familiar with what

behavioral research can do for platforms and websites and that behavioral research has really shaped how your app is designed; is that correct? >> like many technology companies we employ data scientists, user researchers and designers to provide a better customer experience and understand our customers' needs. >> on the specifics when people sign up they get a scratchoff ticket, confetti falls when they place an order they get push notifications they are encouraged to trade. if a friend signs up they get a free stock on and on. why have you added specific gaming design elements to your app? that encourages more free trading? >> congresswoman, we want to give people what they want in a responsible way. we don't believe in gamif

gamification a small number of our customers utilize margin. >> i appreciate that but folks like my nephew aren't your customers they are your product. your customer is sitting next to you, mr. griffin w citadel when you don't pay as much for index funds or apple or anything like that, your app to me shows me that you are really just trying to encourage more trades, which puts more money in your pocket, not helping people build equity through smarter investing. so i would ask you, mr. tenev, i would ask two things who exactly do you believe you are democraticizing finance for? and how do you plan to address these conflicts of interest? >> first of all, i believe in our business model, congresswoman. i believe our business model has become the industry standard for a reason it's because it is good for customers. it's led to the democratization of the markets

and it works and we are very proud to route to market makers on uniform terms without taking into account any of the payments that we generate from them in the routing and solely on the execution -- >> time expired. mr. style is recognized for five minutes. >> thank you madam chairwoman, thank you for holding today's hearing. i am concerned about investors in the state of wisconsin and across our country to make sure they have access to the market, access that is fair and equal to the big banks and the hedge funds in wall street we have seen great improvements in access, the democratization in finance and i am concerned these hearings are going to lead us down the path of additional regulations before we have fully investigated the facts it was stated earlier that that may not be the case. i would like to have inserted into the record a bloomberg article dated january 28 titled

game stop trades show immediate for more regulation, democrat says. >> without objection such is the order. >> thank you i think it will be helpful for everyone to review, with the concerns being that we are going to drift away from the democratization of our finance system also a bit disappointed that we don't have representation in our first hearing here today from the s.e.c. or the dtcc, especially in the early days of the biden administration i think that that would be hopeful, hopefully we will be able to have their participation in a future hearing. if i can direct my first question to mr. gabe plotkin, at melvin capital management. there is obviously a lot of attention that came pooring in on a stock, game stop, that you held a short position in people were tweeting about it, things were building do you have any information as to uniquely why folks on twitter and on reddit and others uniquely targeted that stock >> first of all, thank you for

the question i think it's a really good one i think ultimately -- i am not sure kind of how the momentum built around that. you know, there were certainly some signs, as we diligenced after the fact there were even website names bought nasty things about our firm as far back as november i am not sure how it started but i think ultimately they saw an opportunity with a high interest stock that a lot of people could relate to because it was a retail experience. and that's sort of the genesis of it. >> thank you very much i am going to shift gears. >> into the fifth hour there of the house financial services hearing into the game stop saga. we are going to dip out of it because we have big news welcome to "closing bell" with sara in person. >> first time in what a year almost. >> let's get you up to speed on

the market closing down .5% for the s&p 500, down .7 for the nasdaq the dow down 4%. also nasa rover perseverance safe lelanding on mars moments ago. back to the hearing, sara, and mike santoli of course with us as well. quite a wide range of things discussed of course because such a wide range of character there is from a defense of section 230, from reddit ceo steve huffman, a defense of payment for order flow from citadel founder and ceo ken griffin. distancing the idea of gamification of markets from the robinhood owner. and melvin hedge fund ceo plat kin. a lot of questions a lot of people being cut short >> it was hard to tell what action could be coming out of this

it is up to the s.e.c. to figure out what happened. robinhood and citadel's ceos got the questions about wrongdoing there was a lot of championing of the small investor and questioning of this whole payments for order flow and short selling for payments business did we learn anything new, mike? >> i don't know about learning anything new in terms of what happened i think that you definitely saw most of the focus and the maybe edgiest questions on payment for order flow arrangements as well as general market structure issues i do think that arguably the line of questioning to tenev about exactly what their capital position was at robinhood in those moments when they were under the most stress -- in other words was there a period of time where they perhaps were, you know, out of compliance with the capital on deposit needed to handle those trades. that's one element that might be an area of pursuit down the road but payment for order flow as

ken griffin was saying, has been around a long time they basically have set up this network of rules around it that is based around the market makers' ability to try to get a better execution and have some revenue arrangements around that so it does not get to the floor of the exchange where they have unusually widespread -- it is very technical and i get why people feel like it doesn't pass the smell test and why robinhood's business model is based off it but i don't think that anything surfaced that wasn't already in the rules and known for a long period >> stephanie link joins us on a thursday vick for jones, ceo of dough, also the former trading and operations director at touchdown ameritrade vick tour, we were curious as to what you thought how today unfolded, what the key incites were and what might come out of it. >> i think on one hand if the goal today was to create a public record under oath of a very confusing time for many

then i think it was accomplished f. the goal it was offer a truthful time line of events, debunk some conspiracy theories that are out there and rectify perhaps poor communication up front i think that was accomplished with you i do agree if the goal was to perhaps to give a clear picture of what these events of late january mean for the industry going forward i don't know that you come away with some material changes in the short-term [ indiscernible >> we'll come back to victor in a moment if we can pick up his connection it was intermittent there to an extent to where it sounded like he was saying things very smoothly with some kinds of rhythm we will come back to victor if we can stephanie link, back to perhaps that point that mike brought up

of whether or not robinhood was under serious pressure to financial requirements and perhaps the flash correction could have been a lot bigger and we got away with a bit of a small victory. >> totally agree i mean i think the volatility was so extreme we were talking about it that day, the ten-year fell below 1% because there was this contagion type of feel i think the hearings had to happen i don't think necessarily anything is going to happen. the s.e.c. is going to decide on regulation i thought the representative frommia gentleman did a good job on making the case not to increase regulation because the whole reason they actually had to paws buying, robinhood had to pause buying was because of regulation that was an interesting data point. and another one.

there was a lot of play on the $35 billion gains. whether that helps or not or makes the case for the small guy or gal i don't know but i thought that number was fascinating. >> the other interesting point is game stop is down 11.4%, it's heading down. >> closed. it is not the first hour. >> but roaring kitty is still bullish and still thinks there is a fundamental case there and gabe plotkin defended his bearish thesis. >> interest numbers and revelations to get from him on those points as we said, game stop closed a lot lower. nasdaq was down .7%. russel down 1.7% skbrg movers, tesla and apple feeling a bit of the selling pressure. >> thank you stephanie link and victor jones good to have you here on a shortened show. straight ahead, treasury secretary janet yellen on the

record her thoughts on policy, politics, and today's game top hearing on capitol hill. an exclusive interview, her first on cnbc coming up in just 90 seconds ich parking lots have the strongest signal. i just don't have the bandwidth for more business. seriously, i don't have the bandwidth. glitchy video calls with regional offices? yeah, that's my thing. with at&t business, you do the things you love. our people and network will help do the things you don't. let's take care of business. at&t. your daily dashboard from fidelity -- a visual snapshot of your investments, key portfolio events, all in one place. because when it's decision time, you need decision tech. only from fidelity.

despite closing lower today, stocks are hovering near record highs. bond yields have been moving higher all in the prospect on a new $1.9 trillion stimulus package proposed by president joe biden. earlier today i spoke with treasury secretary and former federal reserve chair janet yellen for a cnbc exclusive

interview. i started by asking her for an update on where the stimulus package stands right now >> members of congress are dealing with it. the first steps toward reconciliation have been pass the budget resolution. so we are hoping to see progress over the next couple of weeks in enacting that package into law president joe biden has had discussions with members of congress on both sides of the aisle. would like to ideally see bipartisan support for a package that we think is really what we need to deal with the pandemic and get beyond it, get our economy back on its feet and help all the people who have been so badly harmed by the pandemic and the economic havoc

it has caused. >> one question i think that's still out there is whether we need $1.9 trillion of stimulus we just had a very strong retail sales report you have got sectors of the economy like manufacturing and housing that are back to prepandemic levels, if not higher the market at a record high. is that an economy that screams $2 trillion needed in stimulus >> well, i think it does we have an unemployment rate that if properly measured in some sense is really close to 10%. in addition to over 9 million people unemployed we have 4 million who dropped out of the labor force, another 2 million who have seen reduced hours. we are digging out of a deep hole last year was the worst year for economic growth since world war ii and the congressional budget office projection recently showed it would take until 2024

in their baseline case to get back to full employment without a package like this. so we think it's very important to have a big package that addresses the pain this has caused 15 million americans behind on their rent, 24 million adults, and 12 million children who don't have enough to eat, small businesses failing you know, i think the price of doing too little is much higher than the price of doing something big. we think that the benefits will far outweigh the costs in the longer run. >> even if it does cause sustained higher inflation, possible overheating of the economy? we are seeing expectations rise. commodity markets are really heating up >> well, inflation has been very

low for over a decade. you know, it's a risk, but it's a risk that the federal reserve and others have tools to address. the greater risk is of scarring of people, having this pandemic take a permanent life long toll on their lives and livelyhoods >> where are you on stimulus checks and particularly on some of the concerns and criticisms around them, that they go to people who are earning a paycheck and might not need them for people who are going to use those stimulus checks to trade stocks how do you respond to some of those concerns >> well, president biden has discussed the checks with republicans and members of congress he wants to make sure that they are appropriately targeted so they go to people in need. you know, not to very high income people who don't need it.

but you know, there is so much pain in this economy i think these checks really will provide relief, and they will help jump start our economy, giving people money to spend when we can get out go and go back to our former lives so, you know, there are a lot of families that are operating on the margin and i think these checks will really help them. >> doesn't it set us up, also, for a huge fiscal cliff in 2022? >> well, there will be a lot of spending from this package this year and next. and it's important not to create a fiscal cliff he want to make sure that the money is there that's needed to keep our economy running at full employment i do expect a fair amount of

private spending to kick in. there has been a big build up in savings buffers that should in the coming years spur spending when people can go back to eating out and to traveling and to vacationing but president biden is also looking to a -- i call it the build back better package, or a jobs andrecovery package that will also provide some fiscal stimulus, but is mainly addressed to -- to try to deal with long term structural problems in the u.s. economy that have resulted in inequality, slow productivity growth he's looking at an infrastructure program, at clean energy investments that would address climate change, in

education and training to provide workers with the skills they need to succeed, invests in r & d and manufacturing to make our country competitive and make sure our citizens have good jobs and upward career ladders. this will be a package in the years after that. >> have you been working on that what sort of price tag are you looking at when it comes to an infrastructure climb deal? >> the details haven't been decided. we have been discussing elements of it like the ones that i mentioned. and certainly part of the package, the parts that are permanent, will be pagid for and ordered and not resulting in long term deficits but we are still working on the details of the package. >> if you do get $179 trillion

in stimulus as you are advocating i know you think that will help us get back to full employment sooner rather than later. what sort of gdp figures could we be looking at private sector estimates range from 5%, 10%, how high could we go in this economy this year >> we are in a deep hole and it would be good if we had really strong growth. i think this package will help ensure this. you office projected that without a package like this it would take until 2024 to get back to full employment, and i think it's -- you know, if all goes well with the pandemic, and that's an air of considerable uncertainty how that will progress but if all goes well i think we could be back to full employment next year. >> you and president biden have talked about raising corporate taxes, individual taxes. clearly, you have to get through this stimulus and through the pandemic what's time frame there?

is it a 2022 story >> well, it would be -- it would be a package that would probably be proposed later this year and would involve spending in investments over a number of years in infrastructure and education and training, things that would last for quite a few years. and probably tax increases to pay for at least part of it that would probably phase in slowly over time. >> we have been spending the day here on cnbc watching the game stop hearing on capitol hill and i know this is really an issue for the s.e.c. in terms of market structure, but you did convene a meeting of regulators to look at the issue do you think that the super easy policies of the federal reserve and the stimulus coming from fiscal authorities are making

the conditions ripe for this kind of speculative trading activity that we are seeing? >> well, you know, honestly, i -- it's hard to say what's caused this, but there is an increased prevalence of zero commission trading that i think has spurred retail investors to become more involved in the markets. you know, i did convene a meeting of regulators to discuss what happened during that episode. the s.e.c. is going to prepare a report and look into it. and, you know, i think our broad conclusion was that the markets worked reasonable well during that time, and the core infrastructure was resilient in spite of the fact that there was

heavy trading and high volatility but we really need to look at whether trading practices are consistent with investor protection and fair and efficient markets. and so there are a number of areas that we want to look at when the s.e.c. has prepared its findings >> we have also seen a surge in the price of bitcoin do you see that as a related phenomenon >> it is a highly speculative asset. and it has had its ups and downs over the years but you know, certainly it has seen a surge recently. >> do you want to regulate it? >> i think it's important to make sure that it is not used as a vehicle for i wllicit transactions and there is investor protection. and so regulating institutions that deal in bitcoin, making

sure that they adhere to their regulatory responsibilities, i think is certainly important >> while we are talking about other speculative activities, we have seen big moves in ipos, in spacs, like we have never seen before the stock market at a record high does it match up to you with fundamentals you have painted a picture of a dire labor market and a country in need. >> partly, we are in a very low interest rate environment. and while valuations are very high in a world of very low interest rates, price earnings type multiples tend to be high that said, there are may be sectors where, you know -- where we should be very careful. >> what about on the debt side certainly you are going to be issuing a lot of debt late they

are year do you think that the fed is going to be able to absorb that, to buy all that debt are you worried about the lack of foreign interest in participation lately do you think they will have to implement another qe, perhaps? >> i think the market for treasuries is very robust. the fed will buy whatever they think is appropriate from the standpoint of monetary policy. but there is a rebust gl-- robu global market for u.s. trea treasuries and we expect to -- we don't see any pressure in terms of being able to finance the deficit. and i expect that to continue. >> finally on trade, secretary yellen, you have indicated that you intend to be tough on china against its abuses on trade and humanitarian issues. how different is the approach from you and president biden going to be than your

predecessors, the trump administration >> we are in the process of evaluating what our approach should be toward china but there are a range of issues where we see unfair practices. it is not just trade, but in some cases forced technology transfer subsidies to high technology industries where there may be national security concerns and we want to make sure that we do address and hold china to abide by its international obligations in these areas i think it's important we are not the only country that has concern about some of china's economic practices, and we have an opportunity to work with our allies to address some of these

practices jointly. but i -- i would say, look, you know, we also need to cooperate with china we have problems like climate change, nuclear proliferation, where the pandemic itself, it's global implications, where we really need to cooperate and can't be successful without that cooperation. so there will be a balance there. >> do tariffs work >> we'll look at that. for the moment, we have kept the tariffs in place that were, you know, put in place by the trump administration expect china adhere to the commitments that were made and we will evaluate going forward what we think is appropriate. >> are we going to expect to see you tweeting at china?

i know you recently joined twitter. >> i did join twitter. and i have been tweeting more than i had historically. but i don't expect to announce policy decisions via twitter >> the other personal question i had for you is whether you picture up any quarantine hobbies as some of the rest of us did, when it comes to baying, or knitting, or perhaps you are just getting ready to be treasury secretary. >> well, we have taken up a lot of cooking, because we haven't been eating out very much. my family has been experimenting with lots of new kinds of cooking, especially indian, which we have been enjoying. >> our thanks to secretary janet yellen who of course wilfred is besides the exclusive headline that she is cooking indian food she is making a forceful case for stimulus and disputing the fact that despite the fact we

are seeing better numbers on retail sales and in can have and with the market at record highs she's still painting a picture of a pretty hard-hit labor market where millions of americans are out of work and she is warning of permanent scarring if we can not get this $1.9 trillion of aid. >> outstanding interview, sara. >> thank you. >> >> he said the realistic unemployment rate is more like 10%. >> she did. >> and hence clearly why we need more stimulus and seemed to imply there would be progress within the next couple of weeks and used the word bipartisan within there but didn't commit to the point also said she wouldn't be drawing specific regulation on bitcoin but perhaps that it would be coming. i thought it was amusing when she said the market is stretched pointed to the low interest environment, no longer her remit. >> powell pointed to fiscal stimulus for why the market has

been rallying. >> a good corporate point. and also said all the retail investors being spurred by zero commissions trading and that the s.e.c. is going to prepare a report and they will react after that off of the back of today's hearings you wonder if they should have done waited until the s.e.c. posted the report. >> they should have had someone from the s.e.c. rather than the kato expert representing that. mike santoli, on taxes, i asked about the time frame for higher corporate taxes, president biden has said he wants that rate to go up to 28%. and individual taxes she made it seem like it was coming later this year as part of a plan for infrastructure and climate spending, almost sort tied those things together as a

pay-for. >> right while definitely not the most immediate priority, it is something that she implied would be married up with anything that was going to be a more permanent element of the spending package. if you think about the fiscal support package now on the table, $1.9 trillion, it is mostly income support. it is mostly enhanced enemployment benefits and things like that which in theory are just going to be there as long as there is need for them and the economy remains weak so it was interesting. i still think it is very consistent with how the administration has presented these things, which is that's not really the first thing we want to get to and it is supposed to be kind of targeted and it is about fair innocence the tax code as opposed to a massive revenue grab by the government it is not really as much about that i would say broadly in terms of the span of her answers, so much consistency with what jay powell has been saying in terms of the dangers of doing to little rather than too much and shadowing the unemployment picture all of that is similar. >> and how we zel deal with

inflation. that's the message from both of them as well. >> interesting stuff and i loved the bit at the end as well. into when you are doing zoom interviews from your living room, you need to -- something personal. >> i agree. >> she has been quarantined like the rest of us. >> i liked that part in particular janet yellen there joining sara for her first cnbc interview as pressry secretary. the game stop hearing is still under way. up next the republican leader of the house financial services committee patrick mchenry. "closing bell," back in a couple we see increased efficiency

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why did robinhood restrict the buying but not the selling of game stop and why did folks get locked out on the buy side only. >> the decision to restrict game stop and other securities was driven purely by deposit and collateral requirements imposed by our clearing houses and even though i recognize customers were very upset and disappointed that we had to do this, i imagine it would have been significantly worse if we prevented customers from selling. >> that was representative patrick mchenry, ranking member of the house financial services committee questioning ceo vlad

tenev and joins us now on cnbc thank you for joining us. >> glad to be with you >> my first sort of broad question is exactly what you feel you have learned today from this hearing and whether one of the conclusions is that perhaps the first set of people that maybe should have been questioned was the regulators not the market participants who seemingly from their answers abided by all the rules that the regulators set for them? >> that's right. sadly, you know, i called for the hearing to understand the facts on the ground, the facts as they occurred on that january 28th day that was of note. the majority, the chair of the committee, gets to choose the venue -- what's the hamilton line -- the menu, the venue, the seating? she chose the panel. i don't think the panel is representative of what happened. i think we've got a lot of facts here that we have not gotten to the bottom of that need to be

established. the time line needs to be locked down so after four hours of this, i don't think we are better off for the interaction. >> of the people who were there, we just showed a clip of you of course questioning the robinhood ceo, who has the most to answer for of the people that were there today? >> certainly robinhood they are of key focus here when tough ceo of reddit, which is a massive social media platform that continues to grow in users and interest, it seemed like he was there just like ken griffin, as an outsider looking in on these actions, sort of a secondary player, if you will, if you could call such significant corporations secondary players here but the real action was on trading platforms, and the real action was driven by a group of reddit users who were trying to do something pretty spectacular and ended up succeeding.

>> finally, congressman, i think there was some good back and forth on this controversial practice about paying for order flow what did you guys learn there? and could we see a potential change in how that is regulated or whether it's allowed? >> well, i think there is a lot of interest around it. what is -- what is hat really discussed at the hearing is the fact that you have a number of different ways that people can invest this one app, robinhood, is significant, sure. but there are dozens you can choose just on the app store right now, much less traditional broker dealers that have apps of their own and cheap ways of trading. so i think that that got into part of the story on really how these apps had funded, how the trades are funded, whether it is directly from the individual or sort of through payment for order flow so i think while it's not well understood, it is better

understood now but not the only model in the marketplace. >> well, we look forward to the next one hopefully with the regulators. congressman mchenry, thank you very much. >> great to be with you. up next, much more in the hearing drama in the game stop en. >>stlus after hours trading, ruutu higher, trip adviser lower. market movers coming u hey frank, our worker's comp insurance is expiring, should we just renew it? yeah, sure. hey there, small business owner. pie insurance here with some sweet advice to stop you from overpaying on worker's comp. try pie instead and save up to 30%. thirty percent? really? get a quote in 3 minutes at easyaspie.com. wow, that is easy. so, need another reminder? no, no no, i'm good. uh, yes please. oh. ho

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moments ago. up next we will dig into those stocks' results and what's next for the streaming company. back in a couple of minutes. this is how you become the best!

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recue's quarterly results are out. let's get to julia boorstin. julia? >> well, wilf, roku beating expectations on the top and bottom line reporting earnings of 49 cent per share that's rather than the six cent per share loss that analysts anticipated and refvenues beat expectations subscribers grew faster than fpted and the company's kbidance for first quarter revenue was stronger than anticipated. the company did say in its letter to shareholders though while they are optimistic about the year ahead, hence the formal outlook for the first quarter, the company is warn being uncertainty further ahead, warning of tougher comparison in the second half of the year. sara and wilf. >> not worrying investors. adding to its 250%% plus gains

of last year. we just got numbers on trip advisor and drop box details when we come back. ♪ ♪ ♪ ♪ ♪

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comes down to hotels, experiences, dining, really across the board it follows a series of disappointing reports from hospitality play evers marriott this morning posting its first annual loss since 2009 however, what is notable is the performance of these travel stocks in the face of these surprising earn vaccine helps travel return. on that note, ceo of trip advisor saying as challenge as 2021 was, we enter 2021 with optimism the question is when when do we start to see a bump up we'll answer that question when steve kaufer joins me tomorrow guys. >> thanks for that we look forward to the interview tomorrow at 2:00 up next we'll break down drop box's numbers. expectations have been the key focus for lots of investors. treasury secretary janet yellen giving us clues on what the biden administration is think

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for nearly a decade, comcast has been helping students get ready. we've connected 4 million low-income students to low- cost, high-speed xfinity internet. we're working with hundreds of school districts across the country to sponsor free internet and laptops. and parents are seeing an impact. and now we're turning 1,000 community centers into lift zones - wifi enabled safe spaces to study. so more students can be ready for anything. i'm trying to do some homework here. drop box numbers out >> hey shares were up as much as 2.5%

but they've turned negative to the tune of about 1.5% the company reporting a bead swinging to a gap loss in fiscal tw 2020, getting rid of a lot of commercial space here are the numbers revenue at 5.4 million adjusted eps up 28 contractors versus 24 cents the street was expecting. the company also announcing a share bye back of a billion, pay to users in line with expectations and rpu coming in better than expected at 130 poip 17 shares with down >> deed ya ra thank you. up next, janet yellen's view and

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inflation has been very low for over a decade, and you know, it's a risk but it's a risk that the federal reserve and others have tools to address. the greater risks is the scarring of people having this pandemic taking a permanent toll on their lives and lively hoods >> janet yellen making a case for more stimulus. 1.9 trillion, to be exact. getting to the heart of one of the biggest debates in the market right now about whether the markets and the economy can absorb another $2 trillion in stimulus and whether the concerns about inflation are justified. she was reacting saying the risk is of not doing enough >> the fed has been trying to accent wait that they are now

more tolerant of higher inflation. they've almost anticipated this idea that the can market is going to be looking for that from suspect and the prospect. whether the bond market takes that in stride or not, it's yet to be seen right now, the absolute levels of where bond yields are should not give much pause to anybody >> it doesn't seem like any foot off the peddle great groove, sara >> i have to say as well, what a joy it's been being back in the same place >> so fun. >> i don't know if the camera guys are ready for this, but it's great as well, because we're really socially distanced but together mike is still a big distance away mike, quickly, on the markets, nasdaq leading the stimulus

down1.6. >> apple's weak again. money leaving that area. readjustment to this higher yield. five out of the last six days, some buying. i don't know if it's using up the sful or what that's what we have to watch for tomorrow >> check out cnbc.com. that does it for "closing bell." "fast money" starts now. >> i'm melissa lee and this is "fast money. tonight on fast, big tech, a big disappointment this week far lagging the broader market in the last few days is the sector sending a big warning signal plus, why an online giant could be looking to expand its physical footprint even more in a bonus hour fast, the new american investor. space. bitcoin and evs with steve byrnes that is coming up 6:00