Does Goldman case help Chris Dodd?

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/02/10/art.getty.chris.dodd.jpg caption="The Goldman case could help pass Sen. Chris Dodd's financial reform plan."]

Colin Barr
Fortune

Could the civil fraud case against Goldman Sachs be the break regulatory reformers have been looking for?

At first blush, the idea seems far-fetched. Republicans in the Senate have steadfastly opposed Democratic plans to rein in the big banks. Bankers' deep pocketbooks give them enormous pull in Washington, and public outrage over financial industry wrongdoing has been blunted by the hair-pulling detail of reform proposals.

The Goldman case could help pass Sen. Chris Dodd's financial reform plan. Yet some observers say the Goldman (GS, Fortune 500) case could swing the balance against the too-big-to-fail banks. It exposes the games Wall Street was playing while the housing boom inflated and then collapsed - with devastating consequences on jobs, incomes and communities.

"This will strengthen the hand of the Democrats in pushing reform," said Douglas Elliott, an economic studies fellow at the Brookings Institute in Washington.

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