Financial Regulatory Smoke

Despite the White House's denial, Democrat Eliot Spitzer doesn't think that bringing the case against Goldman Sachs on Friday right before the Senate was to take up the financial regulatory bill was an accident.

Former New York Gov. Eliot Spitzer said on Monday there are “no coincidences” in the Securities and Exchange Commission filing a lawsuit against Goldman Sachs just as Democrats are about to bring up financial regulatory reform in the Senate. . . .

Despite Democrats claims that the financial regulatory bill will stop bailouts, Congressman Brad Sherman (D-Ca), a member of the House Financial Services Committee, acknowledges that is not the case:

The Dodd bill has unlimited executive bailout authority. That’s something Wall Street desperately wants but doesn’t dare ask for. The bill contains permanent, unlimited bailout authority. . . .

Remember just last week when Senate Banking Committee Chairman Christopher J. Dodd claimed: "It's just a Wall Street lie. This bill ends bailouts." Well, now it is clear that not only will the bill institutionalize bailouts, but they are even keeping a $50 billion fund explicitly for bailouts.

Senate Democratic leaders plan to stand behind the $50 billion fund maligned by Republicans as perpetuating Wall Street bailouts, agreeing at a leadership meeting Monday that they wouldn’t give it up without gaining GOP votes in return, according to a Democratic aide familiar with the discussions.

Democrats have been put on the defensive by Minority Leader Mitch McConnell (R-Ky.), who has cited the fund as reason to oppose the financial regulatory reform bill, and the administration, which described the fund late last week as not “essential” to the overall legislation. . . .

The fund is really irrelevant for whether the bill pushes bailouts, but it makes pretty difficult for Democrats to continue to deny that the bill provides bailouts.