The White House Monday swatted down speculation that the government’s suit against Goldman Sachs is politically motivated to generate political momentum for President Obama’s financial regulatory reform proposal, but acknowledged that the complaint has helped.
White House press secretary Robert Gibbs said the White House did not know in advance that the Securities and Exchange Commission (SEC) planned to announce its civil suit Friday.
“The SEC is, by law, an independent agency. What it does it does not coordinate with the White House and we received no advance notice of any enforcement action,” Gibbs said.
Yet Gibbs also said the suit, which accused Goldman of deceiving investors about a financial instrument, is “a prescient reminder of what’s at stake.”
When asked whether the White House approves of the Democratic National Committee buying ads online to capitalize on the Goldman case, Gibbs declined to comment.
The political fallout from the Goldman case has begun to trickle into the midterm elections. Rep. Mark Kirk, the Illinois Republican running for the U.S. Senate, said he will return all political donations from Goldman, according to a Bloomberg News reporter.
Senate Minority Leader Mitch McConnell, meanwhile, returned fire at the president after Obama accused the Kentucky Republican in his weekly address Saturday of being “cynical and deceptive” in claiming that the bill as it currently stands will allow for large Wall Street firms to continue receiving government bailouts if they get into trouble.
McConnell, citing news reports that said the administration will remove a $50 billion fund to wind down large firms if they are on the verge of bankruptcy, said the president was trying to have it both ways by criticizing his motives “even as his deputies worked to strip the very provision I had called into question a few days before.”
McConnell, speaking on the Senate floor, advised Obama: “Skip the character attacks on anyone who dares to point out flaws with the bill … and work out these problems now. Forget the theatrics, and get to work.”
Gibbs was evasive when asked if the White House wants the $50 billion fund to remain in the bill, going no further than to state that the provision did not originate with the administration.
McConnell said there are still problems with the bill even if the $50 billion “resolution fund” is removed and called for a return to negotiations over the bill and said he thinks a deal could be reached.
“These problems are not insurmountable. This bill is not unfixable,” he said.
Senate Majority Leader Harry Reid is considering bringing the regulatory reform bill to the floor late this week with an eye toward a vote possibly early next week, a spokesman said. But things remain in a state of flux.
Despite the president’s harsh words for Republicans, Gibbs said he expects some Republican support.
“In the end I do think there will be a bipartisan vote on this,” he said.
Treasury Secretary Tim Geithner is meeting Monday with two moderate Republican senators, both of them from Maine: Sen. Olympia Snowe and Sen. Susan Collins. Democrats need one of their votes to break a Republican filibuster.