[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/POLITICS/10/18/john.king.monday.memo/art.wall.street.generic.afp.gi.jpg caption="Republicans say the new financial legislation would allow the federal government to control decisions in the private sector on Wall Street"]
Julian E. Zelizer
Special to CNN
On Sunday, Sens. Chris Dodd and Richard Shelby said that they were close to a bipartisan compromise on financial regulation, which could be reached as early as this week.
Yet many Republicans are attacking the regulations by painting them as yet another example of big government taking over private markets. Even if the bill will likely pass, GOP leaders are planning to use this floor debate to raise philosophical concerns about the role of government in economic life.
As with health care, these Republicans said, the legislation would allow the federal government to control financial decisions in the private sector on Wall Street and squelch private initiative. In The Washington Post, former House Speaker Newt Gingrich has called the Obama-Reid-Pelosi team a "secular-socialist machine."
John C. Coffee, Jr.
Special to CNN
The SEC's enforcement action against Goldman Sachs highlights the widening fissures that underlie Wall Street and raises important issues on three levels:
First (and least important) will be the litigation outcome. Can the SEC convince a court that a strong bias in the portfolio selection process is material to investors, even though the portfolio's contents have been adequately disclosed and approved by an independent portfolio manager?
Second, because the exposure of Goldman's conflicting interests will likely result in some reputational damage to Goldman, investment banks may need to rethink their "Black Box" business model that often places them on all sides of a transaction that they actively structure and market.
Fareed Zakaria | BIO
CNN Anchor, “Fareed Zakaria – GPS”
Federal regulators have filed a "very weak" case against the Wall Street investment bank Goldman Sachs, relying on hindsight to bolster the charges at a politically sensitive time, says analyst Fareed Zakaria.
The complaint, filed last week, accuses Goldman of defrauding investors in a complex financial instrument that was designed to allow one of the firm's clients to bet against securities tied to mortgages for U.S. homes.
SEC officials, who denied any political motivation in bringing the case, filed the charges as Congress was debating new regulations to rein in Wall Street excesses. President Obama is speaking on the subject in New York on Thursday.
CNN Senior Political Analyst
[cnn-photo-caption image=http://i.cdn.turner.com/cnn/2010/OPINION/04/21/borger.wall.street.regulation/tzleft.gloria.borger.cnn.jpg caption="Americans want government to rein in Wall Street, Borger says" width=300 height=169]
When Senate Minority Leader Mitch McConnell decided last week to portray the Democratic version of financial regulation as a Wall Street "bailout," it seemed like a brilliant, albeit cynical, political move.
What do the voters hate even more than Wall Street? Bailouts. What's the perfect way to combine their antagonism for big banks with their distaste for taxpayer-funded bailouts? Accuse the Democrats of bailing out the banks. Perfect.
A good political move in theory, only it didn't work...
CNN Senior Political Contributor
[cnn-photo-caption image=http://i.cdn.turner.com/cnn/2010/OPINION/04/21/rollins.goldman.wall.street/tzleft.ed.rollins.erollins.jpg caption="Rollins: GOP should join with Democrats in passing curbs on Wall Street's excesses" width=300 height=169]
As the Tea Party movement has become the vehicle for the frustration of hundreds of thousands of Americans against elected officials and the government bailout of Wall Street, I've thought many times about Gordon Gekko, the fictional character in the superb 1987 movie "Wall Street."
Played by Michael Douglas, Gekko speaks to a meeting of stockholders in words that became the anthem of the '80s. "The point is, ladies and gentleman, that greed - for lack of a better word - is good. Greed is right. Greed works!"
[cnn-photo-caption image=http://i.l.cnn.net/cnn/2008/US/03/29/countrywide.ceo/art.mozilo.afp.gi.jpg caption="Angelo Mozilo helped lead Countrywide as it grew into the nation's largest mortgage lender."]
The son of a butcher, Mozilo co-founded Countrywide in 1969 and built it into the largest mortgage lender in the U.S. Countrywide wasn't the first to offer exotic mortgages to borrowers with a questionable ability to repay them. In its all-out embrace of such sales, however, it did legitimize the notion that practically any adult could handle a big fat mortgage. In the wake of the housing bust, which toppled Countrywide and IndyMac Bank (another company Mozilo started), the executive's lavish pay package was criticized by many, including Congress. Mozilo left Countrywide last summer after its rescue-sale to Bank of America. A few months later, BofA said it would spend up to $8.7 billion to settle predatory lending charges against Countrywide filed by 11 state attorneys general.
Sr. Writer, CNN Money
With SEC charges against Goldman Sachs in the background, Democrats plan to start debating the Wall Street reform bill in the Senate this week, even as Republicans continue to say they oppose the bill.
"Our bill ends too big to fail, bailouts end forever," said Sen. Chris Dodd, D-Conn., in a Monday press conference held to drum up momentum for the bill. "Our bill holds Wall Street accountable, mandates real transparency, so that large banks can't gamble our money in the shadows of the financial system."
But, in a letter to Senate Democrats on Friday, 41 Senate Republicans said they "are united" in opposing the current bill that passed the Banking Committee last month, according to a letter penned by Senate Minority Leader Mitch McConnell, R-Ky.
[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."]
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.
[cnn-photo-caption image=http://i.cdn.turner.com/money/.element/img/1.0/sections/mag/fortune/mostadmired/2010/snapshots/goldman_sachs_ny_building.jc.jpg caption="Goldman Sachs could be forced to pay out $706.5 million over the next few years."]
Goldman Sachs could face a liability of more than $700 million as a result of charges it misled investors, according to a recent research report.
Brad Hintz, senior analyst at Bernstein Research, estimates that the charges could cost Goldman a total of $706.5 million, or $1.20 per share, over the next few years.
The Securities and Exchange Commission announced Friday it is suing Goldman for failure to disclose conflicts in a 2007 sale of a so-called collateralized debt obligation (CDO). Investors in the CDO, known as Abacus 2007-AC1, ultimately lost $1 billion.
In addition to the SEC case, many investors in Abacus are expected to file related claims against Goldman Sachs.
[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2010/images/04/08/citibank.logo.jpg width=300 height=169]
CNN New York
Earnings season heats up this week with Citigroup powering past analyst expectations for the first quarter. The major banking firm reported net earnings of $4.4 billion, the highest income its reported since second quarter 2007. The results for the bank, one of the hardest hit institutions in the financial crisis, suggest that the firm may finally be recovering.
The latest numbers from Citi and other top banks, including Bank of America and JPMorgan Chase, have far beat industry analyst expectations, due in large part to strong performances from their trading divisions. Several other key banks are due to report this week, including Goldman Sachs on Tuesday.
Investors have their eye on Goldman Sachs, but not just for its earnings report due out tomorrow morning. Two members of Congress called for an investigation into the bank’s role in the mortgage market collapse on Sunday. The Securities and Exchange Commission accused Goldman Sachs of fraud related to the sub-prime mortgage collapse in a civil lawsuit on Friday. The news sent stocks tumbling. Shares of Goldman Sachs plunged nearly 13 percent. JPMorgan Chase and Bank of America both lost about 5 percent. And more backlash from Europe. Britain’s Prime Minister, Gordon Brown, accused the investment bank of “moral bankruptcy”, echoing calls for an investigation. Germany also said it was considering legal action against the bank.