Shock waves from the U.S. stock-market plunge rolled through Washington on Friday and underscored that Wall Street reforms under debate in the Senate do little to address complex technology blamed for the fall.
A glitch in market mechanics — tagged by some as the possible source of the breath-taking 9 percent drop on Thursday — could be the source of financial upheavals to come.
Congress has not visited the market technology issue in detail in some time, let alone considered legislation.
The sell-off — marking the largest intraday decline in the history of the Dow Jones industrial average — will be examined by a congressional subcommittee at a hearing on Tuesday, said U.S. Representative Paul Kanjorski, chairman of the panel.
"The financial market's dramatic swing was incredibly startling," Kanjorski, head of the capital markets subcommittee of the House of Representatives, said in a statement.
"Reports have surfaced that much of this movement was potentially as a result of a computer glitch. We cannot allow a technological error to spook the markets and cause panic. This is unacceptable."
Thursday's market plunge coincided with Senate debate on the most sweeping overhaul of Wall Street regulation since the Great Depression.
It would establish a new government protocol for dismantling large financial firms in distress, set up a financial consumer watchdog and regulate over-the-counter derivatives.
Stock market technology is not a major focus of the bill.
Republican Senator Bob Corker told reporters on Friday the sell-off should not impact the regulatory reform legislation before the Senate.
"Hopefully, hopefully, hopefully, nobody will try to offer an amendment to try to correct what happened yesterday when we don't know what created it yet," Corker said on Capitol Hill, calling for time to let regulators investigate the matter.
"At some point down the road, there may be something that needs to be addressed. But today, I don't think any of us really know what happened," he said.
The benchmark average closed down 347 points on Thursday following a far steeper plunge in afternoon trading that market sources have said may be attributable to an erroneous trade.
President Barack Obama on Friday said, "The regulatory authorities are evaluating this closely, with a concern for protecting investors and preventing this from happening again."
The SEC has launched an investigation, a source familiar with the matter said on Friday.
On Thursday, the SEC and fellow market watchdog the Commodity Futures Trading commission said they were working closely with other regulators and exchanges to review the unusual trading activity.
In an investigation, the SEC would look for any wrongdoing that may have been related to the stock market drop.
Treasury Secretary Timothy Geithner spoke for the second day in a row with the heads of the SEC and CFTC about the sell-off, a Treasury official said on Friday.
Geithner spoke by phone with SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler, but the Treasury official did not offer details on the content of their discussions.
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