Sen. Dodd cites Goldman Sachs in push for financial reform bill
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The financial reform bill pending in the Senate would have prevented the type of dealings that led to a civil complaint against Goldman Sachs, Sen. Christopher Dodd, the sponsor of the bill, said Monday.
Seeking to ride a wave of populist unhappiness with Wall Street, Democrats have stepped up their campaign for the bill, which could come to the floor starting this week. In addition to scouring the Capitol halls for GOP votes, President Obama will push financial reform in a series of appearances, including one in New York City, just blocks from Wall Street.
“Our bill would have prevented those kind of events from happening,” Senate Banking Committee Chairman Dodd said at a televised news conference. Dodd, a Democrat from Connecticut, is retiring from the Senate this year.
“By not enacting our legislation, by filibustering it, stopping it, we leave the American public vulnerable once again to the kind of shenanigans that have occurred in our large financial institutions across this country,” Dodd said.
The Securities and Exchange Commission has sued Goldman, charging that the company created and sold an investment vehicle designed to fail. The vehicle was sold to investors who thought it was safe because it was based on mortgages, but hedge fund Paulson & Co. helped pick the underlying securities and made money betting against the vehicle.
Goldman has denied any wrongdoing and says it lost money on the investments.
The healthcare insurance debate highlighted a rigid partisan divide in Washington, and financial reform appeared headed for a spring rerun along the same political lines.
The Goldman case has come at a propitious time for Democrats, giving them political ammunition. All 41 Republican senators last week signed a letter pledging their opposition to the current version of financial reform, though top Democrats have been lobbying the moderates in the hope of winning at least one vote to break any Republican filibuster.
“Whose side are you on. Whose side are you on. What more do you need to know,” Dodd beseeched. We “came to the brink of a financial collapse. What more do you need to know. And if we do nothing, it is the status quo. We’re vulnerable once again.”
The principal GOP argument is that a $50-billion industry-financed fund would be created to cover the cost of liquidating failed companies. Republicans contend the fund would make bailouts easier, while Democrats say the fund would not be used to prop up companies too big to fail, the frequent refrain to justify taxpayer funds in the past year.
Dodd and Sen. Mark Warner, a Virginia Democrat who was also at the news conference, defended their proposal but signaled they were open to alternatives.
-- Michael Muskal
Twitter.com/LATimesmuskal
