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Obama Administration Sues Goldman Sachs for Fraud, Pushes Regulatory Bill Goldman Sachs Opposes, Gets Accused by Boehner of Doing Goldman’s Bidding

By Matthew Yglesias on April 17, 2010 at 11:31 am

"Obama Administration Sues Goldman Sachs for Fraud, Pushes Regulatory Bill Goldman Sachs Opposes, Gets Accused by Boehner of Doing Goldman’s Bidding"

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There’s no denying that the financial services industry in general and employees of Goldman Sachs in general gave a lot of money to Barack Obama’s campaign in 2007-2008. And these days the financial services industry in unpopular and Goldman stands accused of fraud. So you can see why John Boehner is trying to spin this into a story that reflects poorly on Obama:

Republicans sought to tie President Barack Obama to Wall Street firm Goldman Sachs after it was hit with civil fraud charges.

House Minority Leader John Boehner (R-Ohio) released a statement after the Securities and Exchange Commission filed charges against the Wall Street titan, calling the firm a “key supporter” of the president’s bid to reform the nation’s financial regulatory system.

“These are very serious charges against a key supporter of President Obama’s bill to create a permanent Wall Street bailout fund,” Boehner said Friday in the statement. “Despite President Obama’s rhetoric, his permanent bailout bill gives Goldman Sachs and other big Wall Street banks a permanent, taxpayer-funded safety net by designating them ‘too big to fail.’ Just whose side is President Obama on?”

The problems with this, however, start with the fact that it’s the Obama administration that initiated the lawsuit against Goldman Sachs in the first place. Also consider the fact that Goldman isn’t a leading support of the president’s regulatory reforms at all, it’s a leading opponent as this April 14 Bloomberg article makes clear:

Top White House officials last week pressed the chief executive officers of Goldman Sachs Group Inc., Bank of America Corp. and JPMorgan Chase & Co. to stop lobbying against a financial-regulatory bill advancing in Congress, according to people who attended the meeting. [...] The executives told the White House aides that while they support a regulatory overhaul, they have concerns about the bill sponsored by Senate Banking Committee Chairman Christopher Dodd, which includes new rules for consumer protection and derivatives trading.

The Goldman Sachs position is, as best I can tell, identical to the positions of Boehner and Senator Mitch McConnell and all the rest. They recognize the need for reform, but oppose the reform bill in the House and oppose the reform bill in the Senate and don’t have any alternative reform bill they do support and don’t have any concrete changes they want to see made to the bills. In other words, they don’t want to do anything.

Meanwhile, I don’t know how stupid Boehner and McConnell think people are, but obviously bailouts just happened under the status quo so the idea that passing the bill will somehow make bailouts possible or that standing by the status quo will make it impossible is 100 percent nonsense. Not everyone believes that Chris Dodd’s system is totally airtight, but how on earth does just doing nothing improve on that?

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