Dodd: Goldman fraud suit should spur Republicans to support Wall Street regulations

Dodd: Goldman suit should spur GOP on regulations

WASHINGTON — The chairman of the Senate Banking Committee said Monday that the government’s fraud lawsuit against Goldman Sachs should dissuade Republicans from attempting to block financial regulations pending before the Senate.

Sen. Christopher Dodd said Monday that his legislation would provide more transparency to the type of mortgage-backed instrument that Goldman assembled and that cost investors $1 billion.

The Securities and Exchange Commission filed civil charges Friday against the venerable Wall Street firm, claiming the bank misled investors about the risks surrounding the securities.

“The markets would have known what was going first of all, so the market could have reacted to these things,” Dodd said.

Democrats are facing unified Republican opposition to the bill and have pressed Dodd to negotiate more changes. On Friday, all 41 Republican senators signed a letter to Senate Majority Leader Harry Reid voicing opposition to the legislation.

On Sunday, Treasury Secretary Timothy Geithner, interviewed on NBC, declined to use the SEC’s suit against Goldman to urge action on financial regulations.

But Dodd left no doubt that case presented Democrats with a strong political argument that they would use to cast Republicans as friendly to Wall Street.

“Let there be no doubt in my mind, our bill would have prevented that kind of events from happening, in my view, and that’s what the public needs to know,” he said. “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 Monday his door remains open to Republicans to offer their recommendations. He said: “I’m waiting for that knock on the door.”

Republicans and banking lobbyists have questioned the timing of the SEC suit against Goldman. In a letter being sent Tuesday to the SEC, Rep. Darrell Issa, R-Calif., asked the agency to explain why the case was filed as the financial regulations bill was pending.

“It must be nice for Democrats that the SEC’s filing against Goldman Sachs so conveniently fits into their political agenda,” said Issa, the top Republican on the House Committee on Oversight and Government Reform, in a written statement.

White House spokesman Robert Gibbs on Monday denied any coordination with the SEC, an independent regulatory agency.

“The SEC doesn’t notify the White House of its enforcement actions, and certainly didn’t do so in this case,” he said.

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Associated Press writer Daniel Wagner contributed to this report.