In his weekly radio/web address, Obama targeted for particular criticism Senate minority leader Mitch McConnell and Republican Senatorial Committee Chairman John Cornyn, who he noted had met this week with Wall Street executives.
“Lo and behold, when he returned to Washington, the Senate Republican Leader came out against the common-sense reforms we’ve proposed,” Obama said. “In doing so, he made the cynical and deceptive assertion that reform would somehow enable future bailouts – when he knows that it would do just the opposite.”
Focus of the debate is a Senate financial reform bill that includes a $50 billion fund to pay for liquidating distressed financial firms – which Republicans see as a bailout and something which was not included in the original White House proposal.
"It's especially disappointing for the president to attack Senator McConnell for raising concerns about the bailout loopholes in the bill when just last night the White House agreed with Senator McConnell and its own treasury secretary and asked Senate Democrats to remove the $50 billion fund," McConnell's spokesman, Don Stewart, said on Saturday. "Senator McConnell takes the president at his word that he wants a bill that does not expose taxpayers to future bailouts and will not destroy job creation. And we are committed to working with anyone willing to achieve that."
At this point in the legislative wrangling and political posturing, all 41 Senate Republicans have said they’ll use a parliamentary procedure to block the bill unless changes are made.
In a letter to Senate Majority Leader Harry Reid, the GOP senators wrote: “We are united in our opposition to the partisan legislation reported by the Senate Banking Committee… [The bill would permit] “endless taxpayer bailouts of Wall Street and establishes new and unlimited regulatory powers that will stifle small businesses and community banks.”
Democrats insist that the bill “has been written specifically to end any notion of any kind of a bailout by the American taxpayer again," as Senate Banking Committee Chairman Chris Dodd, (D) Connecticut, said Thursday.
"Our bill stops bailouts by imposing ... tough new requirements on Wall Street firms," Dodd said. "Being too big and too interconnected will cost these firms dearly. And should that not be enough … regulators can use the new powers in our legislation to break these firms up before they can take down the economy of our country."
The dispute is made more pointed by Friday’s announcement that the Securities and Exchange Commission has charged Wall Street giant Goldman Sachs with fraud over its packaging of a subprime mortgage investment.
Clash between Wall Street and regulators
As the Wall Street Journal noted, the case sets up “the biggest clash between Wall Street and regulators since junk-bond king Drexel Burnham Lambert succumbed to a criminal insider-trading investigation in the 1980s, helping to define the era.”
And as the newspaper also points out, “The SEC lawsuit likely strengthens the position of President Barack Obama as he tries to push financial-overhaul legislation through Congress.”
"These are very serious charges against a key supporter of President Obama’s bill to create a permanent Wall Street bailout fund," Boehner said in a statement after the SEC lawsuit was announced. The bill “gives Goldman Sachs and other big Wall Street banks a perpetual, taxpayer- funded safety net by designating them ‘too big to fail.’”
It didn’t take long for White House spokesman Robert Gibbs to push back.
“Actions speak louder than words,” he said. “Barack Obama is on the side of new rules for the road and fighting big bank bailouts and John Boehner is on the side of trying to kill reform on behalf of big banks.”