Republican senators on Thursday bashed Securities and Exchange Commission Chairman Arthur Levitt for demanding that banks lower their loan-loss reserves.

"While the SEC has publicly stated that they are not trying to require reductions in loan-loss reserves, the implication still exists that they are," said Sen. Rod Grams, chairman of Senate Banking's securities subcommittee. "This mixed signal is confusing to regulators, auditors, and bankers and is simply unacceptable."

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