Democrats seized on the Goldman Sachs scandal yesterday as the latest evidence of the need for new legislation cracking down on Wall Street abuses, but Republicans quickly threw up a united front to stave off some of the measures.
Just hours after the Securities and Exchange Commission came down on Goldman, Senate Majority Leader Harry Reid led the charge for passage of a bill putting additional restrictions on Wall Street and requiring greater transparency.
Reid (D-Nev.) said reform would “establish clear rules of the road . . . while protecting consumers, investors and financial institutions.”
“Republicans should stop obstructing our efforts to hold Wall Street accountable so that Main Street can once again prosper,” he added.
Sen. Chris Dodd (D-Conn.), the sponsor of the legislation, said: “We don’t need to know the outcome of this case to know that the opaque nature of unregulated asset-backed securities fueled the financial crisis.
“Let’s work on this together, let’s debate the bill, and pass strong Wall Street reform to protect our country from the kinds of abuses that lost so many their jobs, their homes, and their life savings,” said Dodd.
But Senate Minority Leader Mitch McConnell (R-Ky.) sent a letter to Reid showing that all 41 GOP senators are opposed to the bill — meaning they can likely block its passage — and calling for further negotiations to redraft the bill.
“As currently constructed, this bill allows for endless taxpayer bailouts of Wall Street and establishes new and unlimited regulatory powers that will stifle small businesses and community banks,” McConnell wrote.
Earlier, President Obama argued that the bill should hold off future catastrophes.
“We can’t allow history to repeat itself,” Obama said as he addressed a meeting of his economic advisory board.
“Never again should American taxpayers be forced to step in and pay the price for the responsibility of speculators on Wall Street who made risky bets with the expectation that taxpayers would be there to break their fall.”
Democratic consultants predicted that the Goldman disaster would indeed give a boost to the party’s effort to push the Wall Street reform bill through.
“They’re the most familiar, prestigious firm on Wall Street, and if they’re rotten, the whole barrel’s bad,” one strategist said. “It will move the bill.”