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 Republican leader's words are the clearest sign that the charges against Goldman will play a part in the increasingly tense debate in Washington over regulatory reform, where each side has sought to link the other to large, corporate interests.
Goldman was hit with fraud charges on Friday for having allegedly used financial instruments that bet on the failure of subprime mortgages, a driving cause of the financial crisis and depressed housing market.
Boehner's office also pointed to Goldman employees having collectively contributed more than almost any other company or institution to Obama during the presidential campaign.
But the charges also come amid a backdrop of an increasingly hot financial reform debate in Washington, which is set to take the stage in coming weeks in the Senate.
Republicans blasted Senate Democrats' bill as contributing to a neverending bailout fund, and doing very little to address "too big to fail" financial instutions.
Republicans have argued that the Senate's Wall Street reform bill would lead to permanent bailouts of troubled banks because of a $50 billion fund that is set up to pay for dissolving financial institutions whose collapse could threaten the economy. Republicans argue taxpayers will have to bolster the fund with additional resources.
Democrats and the White House have hit back hard at the charges,
with Senate Banking Commitee Chairman Chris Dodd (D-Conn.) stating that
the fund was a GOP idea. Sheila Bair, the head of the Federal Deposit
Insurance Corporation, has also said the legislation would not lead to
Democrats have responded also by accusing Republicans of being in the pocket of Wall Street banks like Goldman Sachs, and being interested in doing nothing to address the risk of future financial crises. The White House hinted Friday that it plans an "aggressive" campaign against Republicans like Senate Minority Leader Mitch McConnell (Ky.) for their opposition to reform plans.
"With so much at stake, it is not surprising that allies of the big banks and Wall Street lenders have already launched a multi-million-dollar ad campaign to fight these changes," President Barack Obama wrote in an e-mail to supporters on Friday. "Arm-twisting lobbyists are already storming Capitol Hill, seeking to undermine the strong bipartisan foundation of reform with loopholes and exemptions for the most egregious abusers of consumers."
But Boehner shot back on Friday, saying that Republican plans to reform mortgage lenders Fannie Mae and Freddie Mac would do more to protect consumers.
“Instead of permanent bailouts for President Obama’s Wall Street allies, Republicans believe the best way to protect taxpayers is by reforming Fannie Mae and Freddie Mac, the government-sponsored companies that sparked the meltdown by giving high-risk loans to people who couldn’t afford it," he said.