Sen. Carl Levin, D-Mich., took to the Senate floor Monday to lobby for a provision to bar any financial firm that underwrites an asset-backed security from betting against that security.
Although the Senate approved the regulatory reform bill last week, the Michigan Democrat said that a ban on such conflicts of interest is within the scope of a conference committee which will hash out differences between the House and Senate bills.
"Those financial firms cannot be allowed to continue to sell securities to clients and then bet against them," Levin said. "It is essential to remove these schemes that have undermined U.S. financial markets. I urge our colleagues in both chambers as they discuss final Wall Street reform legislation to keep in mind how damaging these schemes have been, to strengthen the Dodd proprietary trading provisions and to include a ban on conflicts of interest."
The Senate reform bill from Senate Banking Committee Chairman Chris Dodd would require regulators to write rules banning proprietary trading and restrict banks investments in private-equity firms and hedge funds.
Levin had sought to go further with his own amendment, but was not able to bring it to a vote.