Emergency Powers!!??!

From the NY Times' Dealbook:

"Federal market regulators are still unsure about the cause of the sharp stock market drop two weeks ago, and that worries Senator Jim Bunning."

Let me interrupt here - I'll tell you the cause of the sharp drop:  more sellers than buyers! If we're talking about the aberrant prints, like 1c in ACN, you don't need Sherlock Holmes for that one either:  sellers came in to sell stock regardless of price, and there were no buyers. 

"Mr. Bunning, Republican of Kentucky, told Mary L. Schapiro, the chairwoman of the Securities and Exchange Commission, that she should request emergency powers from the Senate to do whatever is necessary to prevent another market plunge until the cause of the May 6 flash crash can be determined. 

“If we get bad news out of the I.M.F. or Greece or Portugal or something that could have an adverse affect on our markets, we could see the exact same recurrence and we haven’t done anything,” Mr. Bunning said at a Senate hearing on Thursday."

Senator Bunning - there's an easy fix for this:  make sure that retail traders know that "market order" means "regardless of price."  Make sure that retail traders know that "stop orders" become "market orders" when their stops are triggered.  Once you protect the retail traders, no one care if the professionals shoot themselves in the foot with bad order types.  Yet, Bunning wants the SEC to have "EMERGENCY POWERS!"  Bunning:

“I think there comes a time you take emergency actions and if we are in that situation that we need emergency powers, all you have to do is come here and ask,” Mr. Bunning added.” We don’t want a recurrence, and we surely don’t want to arbitrarily break up trades that were legitimately done under a set of rules, and I would urge you to come and ask this committee for emergency powers.”

I can only hope that the literal translation of what Bunning means is NOT "If it looks like stock prices are going to go a lot lower, and there's nothing that can be done to prolong the Ponzi scheme, please let us know and we'll put regulations in place to prop up stock prices."

Cause that's what it sounds like to me, but maybe I'm just being cynical...

My favorite part of the article sounded like a little cynicism from the author:

"It is unclear as to what emergency powers the Senate could grant the S.E.C. to hold off another flash crash, given that the origins of the first disruption has yet to be determined."

-KD