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Obama: SEC gave ‘no heads-up’ on Goldman

President Obama on Wednesday said "categorically" the SEC never discussed fraud charges against Goldman Sachs with the White House in advance.
/ Source: staff and news service reports

President Barack Obama Wednesday said "categorically" that the Securities and Exchange Commission never discussed fraud charges against Goldman Sachs with the White House in advance.

"The SEC is an an entirely independent agency that we have no day-to-day control over," Obama said in an interview with CNBC. "And they never discussed with us anything with respect to the charges that will be brought."

He said there were "no winks, no heads-up in advance, no signal from anyone."

Obama also suggested that a new value-added tax on Americans is still on the table, seeming to show more openness to the idea than his aides have expressed in recent days. A value-added tax would be similar to a national sales tax, although it would be paid at various steps of the supply chain.

The SEC filed civil fraud charges against Goldman Friday over how the giant Wall Street bank informed some investors about certain mortgage-backed securities. The action came as Capitol Hill debate on a financial reform package headed toward the finish line, raising questions about whether the timing was entirely coincidental.

The SEC approved the charges against Goldman on a party-line 3-2 vote, with the two Republican commissioners opposing the move, according to sources quoted in wire service reports. The vote was taken behind closed doors.

Although the SEC's five commissioners are presidentially appointed, no more than three can belong to the same political party. The agency is independent and is not expected to consult with the White House on such matters.

Obama, who is traveling to New York Thursday for a speech on financial reform, stressed that stronger regulations are needed in the wake of the industry’s near-collapse in 2008, and he said he had made his position clear during his election campaign that year.

“Nobody should be surprised in the position that I'm taking now, because it's one that I was very clear about during the course of the campaign,” he said.

"We have gotten into one of those places where we need to update those rules of the road," Obama said, adding better financial regulations would "rebuild trust."

The president said his administration should be able to solve the deficit problem without burdening the middle class with higher taxes but said he did not want to pre-judge recommendations from a newly named debt commission.

Before deciding what revenue options are best for dealing with the deficit and the economy, Obama said, "I want to get a better picture of what our options are."

After Obama adviser Paul Volcker recently raised the prospect of a value-added tax, or VAT, the Senate voted 85-13 last week for a nonbinding "sense of the Senate" resolution that calls the such a tax "a massive tax increase that will cripple families on fixed income and only further push back America's economic recovery."

For days, White House spokesmen have said the president has not proposed and is not considering a VAT.

"I think I directly answered this the other day by saying that it wasn't something that the president had under consideration," White House press secretary Robert Gibbs told reporters shortly before Obama spoke with CNBC.

After the interview, White House deputy communications director Jen Psaki said nothing has changed and the White House is "not considering" a VAT.

Many European countries impose a VAT, which taxes the value that is added at each stage of production of certain commodities.

When CNBC asked Obama whether he could see a potential VAT in this nation, the president said: "I know that there's been a lot of talk around town lately about the value-added tax. That is something that has worked for some countries. It's something that would be novel for the United States."

"And before, you know, I start saying 'this makes sense or that makes sense,' I want to get a better picture of what our options are," Obama said.

He said his first priority "is to figure out how can we reduce wasteful spending so that, you know, we have a baseline of the core services that we need and the government should provide. And then we decide how do we pay for that."

Volcker has said taxes might have to be raised to slow the deficit's growth. He said a value-added tax "was not as toxic an idea" as it had been in the past.

Since then, some GOP lawmakers and conservative commentators have said the Obama administration is edging toward a VAT.