More Wall Street Fraud Cases Likely: Chanos

Michelle Lodge

Seasoned hedge fund manager James Chanos told CNBC Thursday he expects to see more actions like those of the securities-fraud charges against Goldman Sachs.

James S. Chanos
Scott J. Ferrell | Congressional Quarterly | Getty Images

Standing outside Cooper Union in New York where President Obama had just delivered a financial reform speech, Chanos, head of Kynikos Associates, declined to discuss the specifics of the Securities and Exchange Commission case against Goldman .

However, he said new legislation, like the financial regulation reform bill going through Congress now, should be expected when situations like the Goldman CDO issue need to be addressed.

“We passed Sarbannes-Oxley, post-Enron, specifically to go after that type of malfeasance,” he said. “That seems to me to be a pretty natural approach.”

Chanos On Obama's Speech

Although some on Wall Street are opposed to reforms proposed by President Obama, Chanos said most accept that it's going to happen.

He disagreed with the belief that financial reform will inhibit business and growth.

Chanos added that he is in favor of even more safeguards than those in the current bill, which may face a procedural vote in Congress as early as Monday.

“It [financial reform] wouldn’t kill the golden goose,” he added. “Some of us think it doesn’t go far enough. On the other hand, it’s certainly a lot of steps in right direction. It’s better than what we have now.”

Chanos agreed with the President’s contention that financial reform is beneficial for the country in general and Americans and Wall Street in particular.

One-on-One with Obama

“I think what the American people want and what the markets want is a fair and level playing field, where the rules are clearly elucidated, where the referees are competent and where we know the markets aren’t rigged,” he added.

“Markets will do what they’re going to do as long as the game is fair. I think everybody understands that it’s [financial reform] is good for capital formation.”