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SEC Board Was Split Along Party Lines On Goldman Sachs Charges. Guess Which Side Defended Goldman Sachs?

My goodness. Who would have guessed that Republicans would try to protect the firm whose leaders helped crash the economy? Mitch McConnell told me on

My goodness. Who would have guessed that Republicans would try to protect the firm whose leaders helped crash the economy? Mitch McConnell told me on the teevee that Republicans are trying to reform Wall Street. Now I'm really confused!

The Securities and Exchange Commission decided to sue Goldman Sachs Group Inc. over the objections of two Republican commissioners, suggesting an unusual split at the agency that could politicize one of its most prominent cases in years.

People familiar with the matter said the five-member commission held a lengthy meeting Wednesday to debate the civil-fraud charges against Goldman, and ultimately voted 3-2 in favor of pushing forward. The charges were filed Friday.

Normally the agency prefers to have unanimous support when bringing enforcement actions against the firms it regulates. Word of the SEC split could exacerbate partisan tensions in Washington over the Obama administration's proposed financial-regulatory overhaul.

John Nester, an SEC spokesman, declined to comment.

The SEC alleges that in a 2007 deal, Goldman deceived clients by selling mortgage securities secretly designed by hedge-fund king John Paulson to profit on a plunge in housing prices. That deal was quickly approved by a panel of about a dozen senior Goldman executives, including people who helped to manage the firm's mortgage, credit and legal operations, people familiar with the situation told The Wall Street Journal.

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