Senators fear repeat of stock 'flash crash'

WASHINGTON — With the cause of the stock market's May 6 "flash crash" still unclear, senators told top federal regulators Thursday to take more aggressive steps to ensure that the unnerving market plunge doesn't happen again.

Members of the Senate's subcommittee on securities seemed most troubled that regulators couldn't rule out a repeat of the nearly 1,000-drop on the Dow Jones industrial average, despite their promise to require new "circuit breakers" in June to slow trading across all U.S. exchanges when turbulence hits.

"I'm worried (that) by a lack of not getting something done, we could have a repeat," said Sen. Jim Bunning of Kentucky, the top Republican on the panel. As he spoke, the Dow was down by more than 300 points, as if to punctuate his point.

What seemed to trouble senators most, however, was a sensation that high finance may prove similar to the surprise oil spill in the Gulf of Mexico: Protections may be insufficient when the unexpected occurs.

"My gut just says we may be looking at the beginning of what could be the next crisis," said Sen. Mark Warner of Virginia, who's become the most prominent pro-business voice among Senate Democrats.

Securities and Exchange Commission Chairman Mary Schapiro said she shared Bunning's "sense of urgency," but that the existing brakes on market trading would have to do for now.

That didn't sit well with Bunning. "I think there comes a time when you take emergency action," he said. "All you have to do is come here and ask, because we don't want a reoccurrence, and we sure don't want to arbitrarily break (stock) trades."

Questioning regulators, Warner, a pioneer entrepreneur in the cell phone industry, wondered aloud whether computer-driven trading benefits society. Wall Street firms use software-deployed algorithms to trade massive volumes of stocks and other financial instruments in fractions of a second.

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