During a week in which the Dow Jones Industrial and S&P 500 averages reached record highs, Congress held yet another hearing to fix “problems” in the financial markets, including the imposition of a financial transaction tax (FTT) and stricter regulations on short selling. The May 6, 2021 House Financial Services Committee hearing was the third on “market volatility,” which was also the subject of a March 9, 2021 Senate Banking, Housing, and Urban Affairs Committee hearing.

Some members of Congress claim that both the FTT and new short selling regulations would help to eliminate speculation and be a disincentive for high-risk conduct. But such an overreaction to the activity in a few stocks like GameStop would instead cause significant disruption to financial transactions and reduced returns for tens of millions of investors. And with the markets at record highs, getting the government involved in solving a problem that does not exist makes even less sense.

Following the Senate hearing, Sen. Chris Van Hollen (D-Md.) said that he and Sen. Brian Schatz (D-Hawaii) are planning to reintroduce their bill to impose a 0.1 percent FTT. He claimed this “high roller fee” would reduce risks by cutting down on high-frequency trading, reduce volatility, increase economic equality, and generate billions of dollars for “investment” by the government.