Democrats Eye Financial Reform Amid Goldman Woes With Goldman Sachs facing a lawsuit from the Securities and Exchange Commission, the effort to get financial regulatory legislation on the Senate floor is getting a fillip. But Republicans show no signs of backing down their opposition to the current bill.
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Democrats Eye Financial Reform Amid Goldman Woes

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Democrats Eye Financial Reform Amid Goldman Woes

Democrats Eye Financial Reform Amid Goldman Woes

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RENEE MONTAGNE, Host:

NPR's Audie Cornish reports.

AUDIE CORNISH: The financial regulatory bill is long and complicated, but Democrats often portray it in simple terms of good and evil. Just listen to Senate Majority Leader Harry Reid.

MONTAGNE: It's a good bill. I support it because I support transparency, accountability and economic security. Those opposed to it favor secrecy, irresponsibility and reckless risk-taking.

CORNISH: The news that the Securities and Exchange Commission is suing Goldman Sachs is just the latest opportunity to pile on that message. Senate banking chief Chris Dodd said the accusation against Goldman will make it harder and harder for Republicans to justify their opposition.

CORNISH: Let there be no doubt in my mind: Our bill would have prevented that kind of an event from happening, in my view. And that's what the public needs to know. By not enacting our legislation, by filibustering it, stopping it, we leave the American public vulnerable once again to the kind of - the kind of shenanigans that have occurred in our large financial institutions across this country.

CORNISH: The SEC claims that Goldman misled investors about the riskiness of the mortgage-backed financial products it produced with the help of a hedge fund manager who was allegedly betting against those same products. Goldman Sachs calls these allegations unfounded. And so far, it's not clear whether the company actually did anything illegal.

P: I still have concerns over whether that allegation is correct or not.

CORNISH: This is Darell Duffie, a finance professor at Stanford University.

P: But I don't see how the legislation, however valuable the legislation is, is going to address this particular problem. If a bank misleads its clients, it's always been liable and it will continue to be liable in the future.

CORNISH: Whether the SEC is successful or not, Elliott says Democrats benefit from the filing of the Goldman suit last week.

MONTAGNE: Public anger is the main political thing that's going to drive this forward. The public really wants something to be done. And with them being angrier at Goldman Sachs, there's even more political momentum than there was on Thursday, when they only somewhat hated Goldman Sachs.

CORNISH: But Republicans show no sign of backing down their opposition to the current bill - nor should they, says New Hampshire's GOP Senator Judd Gregg.

CORNISH: That should not cause us to legislate based on hyperbole and populist pandering. We should legislate based on what's going to be best for the financial services industry and for Main Street, which depends on a strong financial services industry to get credit.

CORNISH: Audie Cornish, NPR News, the Capitol.

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