Tuesday: Goldman CEO Set to Testify; Obama to Talk Economy in Midwest
Goldman Sachs CEO Lloyd Blankfein will return to Capitol Hill on Tuesday. (Photo by Mark Wilson/Getty Images.)
Lloyd Blankfein is about to have a very difficult Tuesday. With public anger toward the financial industry at a rolling boil and both political parties playing the part of bad cop on Wall Street, the CEO of Goldman Sachs heads to Capitol Hill to face a Senate panel investigating the role of investment banks in the financial crisis.
Senators on the Permanent Subcommittee on Investigations, chaired by Michigan Democrat Carl Levin, are expected to blast Goldman for profiting $3.7 billion ahead of the crisis by betting against the housing market. Committee members will likely point to recently released internal e-mails from Goldman executives to show that the Wall Street powerhouse had a consistent strategy of shorting the market.
In prepared remarks to the panel, Blankfein says:
“We didn’t have a massive short against the housing market and we certainly did not bet against our clients. Rather, we believe that we managed our risk as our shareholders and our regulators would expect.”
The hearing comes just 11 days after the Securities and Exchange Commission filed civil charges against Goldman. “It was one of the worst days in my professional life,” Blankfein says in his remarks. “While we strongly disagree with the SEC’s complaint, I also recognize how such a complicated transaction may look to many people.”
The Goldman Sachs trader at the center of the SEC’s case, Fabrice Tourre, will also testify before the panel.
We’ll have lots more on Tuesday’s hearings here on the Rundown, including observations from MIT’s Simon Johnson. Stay tuned.
Democrats Regroup on Financial Reform
Senate Democrats are preparing another vote as early Tuesday on whether to begin debate on financial reform legislation. Republicans successfully blocked Democrats’ first attempt in a 57-41 vote on Monday. Democrats believe Blankfein’s appearance will expose many of the practices they say “the regulatory reform bill is meant to abolish,” reports Politico, adding “They’ll keep voting until they can peel off at least one or two moderate Republicans who won’t want to take a PR hit over blocking the reform bill.”
Obama to Tour Midwest
President Barack Obama leaves Washington for a two-day swing through the Midwest. The trip is part of the president’s “White House to Main Street” tour designed to tout the administration’s efforts to improve the economy. The president will conclude Tuesday with a town-hall style event in Iowa.
“When President Barack Obama visits Iowa today, he plans to praise last year’s economic stimulus bill for helping a large manufacturer add hundreds of jobs building wind turbine blades,” says the Des Moines Register. “But what the southeast Iowa counties he is scheduled to visit need most is help with sustaining the small manufacturers that have bled thousands of jobs in the past year and a half.”
Hearing Set for Mine Disaster
A Senate panel on Tuesday will hold the first congressional hearing into this month’s explosion at West Virginia’s Big Branch coal mine, which killed 29 people in the worst mining disaster in four decades. Lawmakers will question officials from the federal Mine Safety and Health Administration to gauge whether the agency has been tough enough on mine safety. The MHSA has the authority to shut down a mine for safety violations, but as NPR reports, “It has rarely used those powers.”