The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Sat, 30 May 2026 11:30:05 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Robinhood and GameStop: Essential Issues and Next Steps for Regulators and Investors – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Robinhood and GameStop: Essential Issues and Next Steps for Regulators and Investors https://corpgov.law.harvard.edu/2021/02/23/robinhood-and-gamestop-essential-issues-and-next-steps-for-regulators-and-investors/?utm_source=rss&utm_medium=rss&utm_campaign=robinhood-and-gamestop-essential-issues-and-next-steps-for-regulators-and-investors https://corpgov.law.harvard.edu/2021/02/23/robinhood-and-gamestop-essential-issues-and-next-steps-for-regulators-and-investors/#comments Tue, 23 Feb 2021 13:50:03 +0000 https://corpgov.law.harvard.edu/?p=136357?d=20210223085003EST Posted by Lawrence Goodman, Steven Lofchie, and Robin L. Lumsdaine, Center for Financial Stability, on Tuesday, February 23, 2021
Editor's Note:

Lawrence Goodman is president and founder, and Steven Lofchie, and Robin L. Lumsdaine are senior fellows at the Center for Financial Stability. This post is based on a CFS memorandum by Mr. Goodman, Mr. Lofchie, Ms. Lumsdaine, John D. Feldmann, Diane Glossman, and Yubo Wang.

The hullabaloo surrounding the run up in the price of GameStop (GME) and the activities of Robinhood have generated front page news, calls for action, and allegations of wrongdoing. However, lost in the headlines and struggles between good and bad or big and little is the issue that should be of greatest concern—financial stability.

Critical issues for regulators and investors fall into two broad related categories. They are 1) macro risk management and crisis prevention and 2) micro regulatory issues. Macro financial conditions pave the way for micro actions and distortions. [1] For instance, many view the housing and mortgage sector as the cause of the Global Financial Crisis in 2008 rather than acknowledging the extended period of ease monetary policy fueling the financial flames. [2]

  • As to risk management and crisis prevention, events surrounding Robinhood and GameStop may be the first shot across the bow regarding deeper and more systemic financial market risks. Seemingly idiosyncratic risks in early 2007 unveiled fault-lines that ultimately unleashed the Global Financial Crisis in 2008. In retrospect, HSBC’s subprime mortgage unit problems on February 8, 2007 and Bear Stearns’ bailout of two troubled hedge funds on June 22, 2007 were meaningful early warning signs of stress.

For a long time, the Center for Financial Stability (CFS) has been clear regarding the role of monetary policy in growing financial excess and distortions. [3]

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