Leave your feedback Share Copy URL https://www.pbs.org/newshour/show/government-intervention-does-little-to-calm-markets Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter Transcript Wall Street saw stocks dive Thursday as reports emerged that the Treasury Department is considering new moves to increase bank stability. Financial experts discuss the latest moves and what comes next for the government and the markets. Read the Full Transcript Notice: Transcripts are machine and human generated and lightly edited for accuracy. They may contain errors. JEFFREY BROWN: Until mid-afternoon, it looked like a relatively calmer day on the stock market. And then yet another dramatic drop took the Dow down sharply.And there was talk of yet another major government move, with the Treasury Department considering a direct investment in banks.We look at the latest developments now with William Poole, former president of the Federal Reserve Bank in St. Louis. He's now a senior fellow at the CATO Institute; Hugh Johnson, chairman and chief investment officer at Johnson Illington Advisors; and Krishna Guha, the U.S. economics editor for the Financial Times.Well, Hugh Johnson, can you tell exactly what happened this afternoon to bring on the drop? It dropped from about 3 o'clock to 4 o'clock today about 400 points. What happened? HUGH JOHNSON, Johnson Illington Advisors: Well, we had bad news on General Motors, but I think really what it is, is that you have a lot of sort of institutional investors, as well as individuals, that are sort of prepared to sell or they have it in their mind that they're going to sell.They're kind of hopeful that the stock market is going to rally and they can postpone their selling, but when the stock market doesn't rally, as it didn't do by 2 o'clock, they kind of throw the towel in, if you may, and start to do their selling.There's some institutions, such as mutual funds, where they're faced with redemptions from their shareholders. That is, their shareholders want their money back, and they have no choice. And by the end of the day, they have to sell.So come 2 o'clock, they start to sell. And that's why it picks up in the latter part of the day; the sellers have to get out. JEFFREY BROWN: Krishna Guha, what would you add to that? Who is selling? And why so fast? KRISHNA GUHA, Financial Times: Well, as your previous guest said, one of the factors causing this is redemptions out of stock market investment funds.But I think there's a wider point here, which is any given amount of selling now is producing dramatic falls in the stock market. And there's a simple reason for that: There's just very little buying interest out there. There's very little interest from end investors.But also the securities firms that normally act as so-called market makers — that's to say they offer to buy and to sell prices with a spread — stocks with a spread between those two prices — those banks aren't doing the job that they used to do.They don't want to put their capital at risk to the same extent, and they're scared by the extraordinary volatility that bounces up and down in stock prices.