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Wed Mar 10, 2010 at 15:25:47 PM EST
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| From Ye Olde inbox: WASHINGTON, D.C. – United States Senators Jeff Merkley (OR), Carl Levin (MI), Ted Kaufman (DE), Sherrod Brown (OH), and Jeanne Shaheen (NH) put forward a new proposal today to help prevent taxpayer bailouts of financial firms by limiting high-risk speculation, also known as proprietary trading.
...snip... “With this bill, we attempt to rein in risky proprietary trading by firms whose failures wreak havoc on our financial markets and our taxpayers,” Levin said. “Risky trading by a handful of major firms contributed to the collapse of the some of the largest financial firms
in the world, hundreds of billions of dollars in losses to taxpayers, and the devastation of the entire world economy. This legislation is aimed at preventing high-risk trading strategies adopted by a few firms from leading to another crisis.”
more below the fold... |
| Eric B. :: Levin backs bill limiting taxpayer exposure to high-risk speculating |
The Protect our Recovery through Oversight of Proprietary Trading Act (or PROP Trading Act) would restrict these trades at banks and other large, important financial institutions. By keeping our banks and other large, complex financial institutions away from these risky activities, the bill will help protect the taxpayer from bailouts and the damage to the economy that comes from the failure of critical financial institutions. At the same time, the bill leaves plenty of space for smaller firms to do speculative trading, but outside of
taxpayer-supported commercial banks. Specifically, the bill:
• Bars banks, bank holding companies, and their affiliates and subsidiaries from engaging in high risk speculation involving any stock, bond, option, commodity, derivative, or other security or financial instrument. Also bars those entities from investing in or
sponsoring a hedge fund or private equity fund.
• Requires large, important nonbank financial institutions to set aside additional capital to discourage them from engaging in high-risk speculation and investing or sponsoring hedge funds or private equity funds. The bill also puts strict limits on the amount of such speculation.
• Prohibits securities brokers from betting against the packages of loans (asset-backed securities) they are promoting to their clients. |
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