Banking/Financial Institutions

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. 

The Service Employees International Union (SEIU) on Monday announced that several rallies will occur this week demanding financial reform. The demonstrations will be held at events hosted by some of the country's largest banks. 

"The nation's biggest banks crashed the economy, causing over 8 million to lose their jobs, 1 out of every 8 families facing foreclosure, and cities, counties and states teetering on the edge of bankruptcy," stated an SEIU release on the protests. "Now, these same banks are pouring $1.4 million a day into the Senate to stop Wall Street reform. Ordinary Americans are saying 'enough is enough."  Read more...

Sen. Russ Feingold (D-Wis.) will vote to begin debate on a financial regulatory reform bill tonight but he won't support a measure that isn't tough on Wall Street.

"Preventing even a debate on this critically important issue is a fantasy for the Wall Street banks that seek to undermine the first serious effort to reform financial regulations since their reckless and irresponsible actions triggered the worst recession our nation has experienced since the Great Depression," Feingold said Monday in a statement. 

While supporting debate on the bill, he doesn't support a predetermined amending process or a "template" for floor consideration "that effectively puts the fix in on some negotiated final product." 

Read more...

Senate Republicans may offer an alternate financial overhaul bill if a test vote pushed by Democrats fails on Monday.

As Senate Democrats and Republicans wrangle over legislation to reform Wall Street, a new national poll shows nearly two-thirds of Americans support stricter rules to govern banks and other financial institutions. 

By a wide margin, 65 of Americans say they support tighter regulations on how banks and financial institutions do business with only 31 percent opposed, according to an ABC News/Washington Post poll released Monday. 

The poll also reflects that 52 percent trust the Obama administration to handle financial reform whereas 35 percent say Republicans would do a better job. But it's not all good news for the White House as the public splits evenly at 48 percent as to how well he's handled it so far, although the president has better results with those who want stricter regulations. 

An overhaul of the regulations that govern Wall Street is urgently needed, and a delay of legislation will only increase uncertainty and undermine growth as markets rebound, a Treasury official said Monday. 

There needs to be "a stable and predictable financial system, one where all financial service providers are held to the same minimum federal standards," Michael Barr, assistant Treasury secretary for financial institutions, told community bankers Monday. 

Barr advocated reforming securitization markets, credit rating agencies and the multi-trillion derivatives market. He also suggested subjecting interconnected financial firms to comprehensive capital and supervision standards while closing loopholes so no firms escape oversight.

"We have a chance to enact the strongest, most important financial reforms since those that followed the Great Depression," he told the Independent Community Bankers of America.

A vote against a financial regulatory reform bill is a vote to protect Wall Street, a Senate Democratic leadership spokesman said Monday. 

Without a deal in the offing on the measure and cloture vote looming at 5 p.m. today, Senate Democratic leadership got out of the gate first calling on Republicans to support revamping Wall Street regulations while continuing to work toward a bipartisan agreement. 

"We remain eager to work with Republicans who are sincere about reforming Wall Street, and we are hopeful for a bipartisan agreement on this important effort," said Jim Manley, spokesman for Senate Majority Leader Harry Reid. 

"But there are no two ways about it, a vote against even opening debate on holding Wall Street accountable is a vote to protect Wall Street."

The letter from five dozen House Democrats comes a day before Goldman executives testify on Capitol Hill.

The Treasury Department on Monday announced it has filed the proper papers with the Securities and Exchange Commission to sell its 7.7 billion shares of Citigroup common stock. 

Morgan Stanley is the Department's sales agent for the stock and has the authority to sell up to 1.5 billion shares. The bank must also provide opportunities for small broker-dealers to participate in the sale, which includes shops owned by minorities and women. Read more...