U.S. President Barack Obama says he will veto any financial reform legislation that does not strongly regulate derivatives, the complex transactions that critics say started the economic crisis. Opposition Republicans in the Senate say they are solidly against the bill.
U.S. lawmakers are considering legislation that would regulate derivatives for the first time. President Obama says any financial overhaul bill that does not, will not receive his signature.
"I will veto legislation that does not bring the derivatives market under control and some sort of regulatory framework that assures that we do not have the same kind of crisis that we have seen in the past," he said.
Critics say derivatives, like the mortgage-backed securities whose values plummeted in the 2008 housing crisis, played a major role in driving the U.S. economy into crisis.
At a White House meeting Friday, Mr. Obama said derivatives caused big problems at the failed insurance company AIG, and could bring more trouble if not brought under control. "There are literally trillions of dollars sloshing around this market that basically changes hands under the cover of darkness. When things go wrong, as they did in AIG, they can bring down the entire economy, and that is why we have got to bring more transparency and oversight when it comes to derivatives," he said.
The president wants legislation that would force Wall Street firms to pay into a fund that would help failing banks, so taxpayers would not have to pay the cost.
The top Senate Republican, Minority Leader Mitch McConnell, said Friday he has signatures from 40 other Republican Senators opposing the bill and demanding further negotiations.
Mr. Obama accused the opposition of putting taxpayers in financial jeopardy. "And anyone who opposes this reform is going to be leaving taxpayers on the hook if a crisis like the one that we have just seen ever happens again, and I consider that unacceptable," he said.
Republicans in Congress say the president's proposed emergency fund would lead to endless buyouts of financial firms. Mr. Obama says there will be no more buyouts.
Meanwhile, the U.S. government is accusing the powerful investment firm Goldman Sachs of defrauding investors.
The Securities and Exchange Commission says in a civil complaint that the company failed to disclose conflicts of interest in mortgage investments it sold as the housing market was collapsing in 2007.
The agency says two European banks that bought securities from Goldman Sachs lost almost $1 billion. The firm denies the allegations.
Goldman Sachs shares fell more than 12 percent on Friday, and the Dow Jones Industrial Average dropped about 126 points, more than one percent.