Senators eye bank trading limits: Sen Merkley

WASHINGTON (Reuters) – Bipartisan discussion is under way in the U.S. Senate Banking Committee about possibly imposing new limits on proprietary trading by banks, a Democratic committee member told Reuters on Tuesday.

Senator Jeff Merkley had earlier called for a study of the risks and conflicts of insured depository institutions investing their own money, as opposed to customers’ money, in “securities, commodities, derivatives, hedge funds, private equity firms” or other financial products.

In an exclusive interview, Merkley said: “There’s a lot of discussion going on between (Democrats and Republicans) about doing something significantly stronger than that.”

He said: “If you have that type of function inside a depository lending institution, at some point, it’s going to blow up the institution … We’re going to see it again if we don’t create some kind of a wall.”

The principle of putting up “a firewall between risky activities and the depository lending function … is important and needs to be in this bill,” he said, referring to financial reform legislation being forged by the banking panel.

The Oregon lawmaker also said he still plans to vote against reconfirming Ben Bernanke as chairman of the Federal Reserve — a position Merkley marked out late last year.