Senators Target Wall Street, With Goldman Sachs in Mind

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Senators Target Wall Street, With Goldman Sachs in Mind

by Shahien Nasiripour


A quintet of Democratic senators introduced legislation Wednesday to specifically prohibit investment maneuvers that have been likened to "selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars".

Senators Jeff Merkley (Ore.), Carl Levin (Mich.), Sherrod Brown (Ohio), Ted Kaufman (Del.) and Jeanne Shaheen (N.H.) are pushing the Obama administration's proposal to rein in banks' Wall Street-like practices, such as trading securities for their own profit, while they enjoy the protections afforded by U.S. taxpayers through deposit insurance and access to cheap funds courtesy of short-term loans from the Federal Reserve. Their legislation also attempts to sever the ties between banks and largely unregulated hedge funds and private equity funds -- firms that invest and bet for the benefit of their investors.

Those two proposals try to resurrect the wall between Main Street banking and Wall Street trading, a Depression-era reform that was torn down during the Clinton administration. After excessive risk-taking by Wall Street culminated in the worst economic crisis since the Great Depression, necessitating hundreds of billions of dollars in a taxpayer-funded bailout, top economists and Wall Street veterans have come out in favor of at least partially restoring that divide.

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http://www.commondreams.org/headline/2010/03/11-1

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