Bank reform to prevent some betting
TEXT OF INTERVIEW
Steve Chiotakis: Heads of the New York Stock Exchange and the Nasdaq go to Capitol Hill today to discuss Thursday's wild ride with financial regulators. The reasons for that record plunge are still a mystery. Meanwhile, banking reform is on the Senate's agenda again this week. A new amendment to that bill is being announced today. Our own John Dimsdale joins us from Washington to talk about this. Good morning, John.
John Dimsdale: Good morning, Stacey.
Vanek-Smith: So John, what is this latest amendment?
Dimsdale: Well it stems from those charges against Goldman Sachs that were brought by the Securities and Exchange Commission. Goldman's charged with helping a hedge fund put together a package of shaky mortgages that were then sold to Goldman's clients without telling them that the fund was betting the mortgages would fail. So a couple of senators, led by Michigan Democrat Carl Levin, are putting together an amendment that would ban investment banks from betting against that products that they sell to their customers.
Vanek-Smith: Hmmm. Well since banks earn a lot of money from these trades, I would imagine this is one more part of the reform bill that bank lobbyists are trying to defeat?
Dimsdale: They haven't seen the amendment yet, so we haven't got any official comment, but yes, their defense has always been that they act only as the trader in these sales -- "market maker" is the technical term. They say they're offering products to sophisticated buyers who have the expertise to investigate what's going on before they invest in them. And the banks say revealing the motives of the seller is not their obligation.
Vanek-Smith: What are the prospects for Senate passage of the financial reform bill?
Dimsdale: Well the voting on amendments resumes tomorrow, and the pace is going to pick up. Leaders had hoped to be done by end of this week. Most predict it will be next week before the Senate finishes. And the Senate bill has to be reconciled with the House before any final package can be sent to the White House.
Vanek-Smith: John Dimsdale in Washington, D.C. Thanks John.
Dimsdale: You're welcome.