Banking/Financial Institutions

Fabrice Tourre, the sole Goldman Sachs executive named by the SEC for defrauding investors, denied any involvement in misleading investors on the soundness of mortgage-backed securities that initially merited high returns, but eventually turned toxic. 

"I deny -- categorically -- the SEC's allegation," he said in testimony before the Senate Investigation Committee. "And I will defend myself in court against this false claim."

House Majority Leader Steny Hoyer (D-Md.) criticized Senate Republicans for blocking debate on financial reform legislation. 

"I am extremely disappointed that Republicans have once again blocked progress for middle-class Americans," he said in prepared remarks. "To a person, Senate Republicans showed that they are continuing to put the interests of Wall Street above those of Main Street, just as House Republicans did when they voted against Wall Street reform in the House."  Read more...

Sen. Byron Dorgan (D-N.D.) said Monday he will introduce legislation banning part of the multitrillion-dollar market for financial derivatives.

Dorgan said he will offer an amendment to the broad financial overhaul package, now pending in the Senate, that would prohibit "naked" credit defaults swaps. 

The market for credit default swaps has been widely blamed for exacerbating the financial crisis. Credit default swaps are derivatives tied the potential for default of an underlying asset. A "naked" swap is one in which the parties do not hold a stake in the underlying asset.

"I'm interested in offering an amendment that bans naked credit default swaps. You know what a naked credit swap is? That's one that has no insurable interest on either side. It's just flat out betting rather than investing," Dorgan said.

President Barack Obama cautioned lawmakers against watering down financial regulatory reform legislation and urged them to get back to work after a Monday vote that delayed debate on the measure. 

Obama criticized Republicans for not moving forward on the measure saying "some of these Senators may believe that his obstruction is a good political strategy, and others may see delay as an opportunity to take this debate behind closed doors, where financial industry lobbyists can water down reform or kill it altogether."

"I am deeply disappointed that Senate Republicans voted in a block against allowing a public debate on Wall Street reform to begin," he said in a statement. 

A lack of consumer protections and accountability on Wall Street led to the financial crisis in 2008 and urged lawmakers to continue working on the bill, he said. 

Senate Republicans on Monday blocked a Democratic effort to overhaul the financial system and crack down on Wall Street.

Key Democrats have reached an agreement to include major provisions of a bill to regulate the over-the-counter derivatives market into a larger proposal on financial regulatory reform. 

Senate Banking Chairman Chris Dodd (D-Conn.) and Senate Agriculture Chairwoman Blanche Lincoln announced on Monday that the bill will make the market transparent with real-time price reporting, lower systemic risk by requiring mandatory trading and clearing of swaps through a clearinghouse and require transactions to be traded on a regulated exchange. 

"We have taken the strongest provisions from our two bills," Dodd said in a statement. "Under this agreement we will see derivatives moved through clearinghouses, traded on exchanges and facing tough capital and margin requirements that will help stop Wall Street from gambling with our financial security."

Sen. Carl Levin (D-Mich.) said Goldman Sachs misled investors when selling them mortgage-backed securities.

President Barack Obama called on Congress to pass a financial regulatory reform bill with time ticking away before a vote o to begin debate on the measure. 

Obama advocated combining the bill proposed Senate Banking Chairman Chris Dodd (D-Conn.) and a measure tightening enforcement of the derivatives market sponsored by Senate Agriculture Chairwoman Blanche Lincoln (D-Ark.). 

Passage of the package will "move the nation another important step toward necessary, comprehensive Wall Street reform that will create clear rules of the road and can be consistently and systematically enforced," the statement said. "Thus creating a more stable financial system with better protection for consumers and investors."

The administration will oppose efforts to add loopholes to the bill that "undermine consumer and investor protection or that allow institutions to avoid oversight," the statement said. 

A vote allowing the Senate to begin debate on the bill is scheduled for 5 p.m.

Goldman Sachs didn't have a massive short against the housing market or bet against its clients, CEO Lloyd Blankfein is expected to tell a Senate panel Tuesday.

Blankfein called a lawsuit filed by the Securities and Exchange Commission "one of the worst days in my professional life, as I know it was for every person at our firm," the testimony says. 

"While we strongly disagree with the SEC's complaint, I also recognize how such a complicated transaction may look to many people," he says. 

Goldman Sachs has been accused of committing financial fraud by the SEC, which charges the bank with setting up a mortgaged-back security that was designed to fail. The SEC argues Goldman set up the security by working with a hedge fund that chose the financial instruments that were to be included and then bet against the investment. Read more...

Sen. Banking Chairman Chris Dodd (D-Conn.) urged his colleagues to let debate begin and tackle contentious issues on a financial regulatory reform bill on the Senate floor. 

"How can we resolve the issues if I can't bring up the bill," Dodd said on the floor. "I urge my colleagues to let us get to this debate so we can resolve these matters."

He said even if the bill could come to the floor more talks would need to take place to determine how to manage the legislation on the floor. 

He suggested bringing amendments to the floor. Republicans have suggested trying to work out the bill's major issues including a $50 billion fund to help unwind failing financial institutions and language that ends 'too big to fail.' 

With a cloture vote scheduled in about 90 minutes, Dodd pleaded with Republicans to let a public debate start on the bill saying it was "unrealistic" to think that all issues on the measure could've been resolved before the vote today. 

Dodd and Senate Banking ranking member Richard Shelby (R-Ala.) met this afternoon to discuss the bill ahead of the 5 p.m. vote. All 41 Republicans are expected to vote against allowing debate to start. 

Senate Republicans have said they are opposed to the bill in its current form and will keep Democrats one vote short of allowing debate to begin on the legislation. 

"We have yet to stand up and address what caused this to happen in our country," Dodd said of the 2008 financial crisis.