WASHINGTON — Two senators introduced legislation Wednesday echoing calls from the Obama administration to bar taxpayer-insured banks and their affiliates and subsidiaries from engaging in proprietary trading.
The bill, sponsored by Sens. Jeff Merkley (D., Ore.) and Carl Levin (D., Mich.), is designed to “make banking boring again,” according to a summary.
President Barack Obama proposed the “Volcker Rule,” named after former Federal Reserve Chairman Paul Volcker, in January as the administration sought new ways to crack down on risk and size at financial companies.
Messrs. Merkley and Levin’s measure is stronger than what is likely to emerge from the Senate Banking Committee in the form of a broader financial overhaul. Committee members, locked in discussions about how to rewrite financial rules, are expected to water down the Volcker Rule by giving more discretion to regulators.
It is unclear how Messrs. Merkley and Levin’s measure will play into the broader financial regulatory rewrite. “This is the time to have the debate,” said Mr. Merkley, who is a member of the committee. Mr. Levin isn’t.
Whatever financial package emerges from the talks among Chairman Christopher Dodd (D., Conn.) and other lawmakers, it will be debated formally by the committee, giving members like Mr. Merkley the chance to offer their proposals as amendments.
“The circumstances on the ground put the issue before us. Commercial banks are now tied into highly risky investment houses,” Mr. Merkley said Wednesday.