A Senate panel has approved legislation that would limit the ability of Wall Street banks to trade complex financial tools called derivatives.
The bill offered by Senate Agriculture Committee Chairman Sen. Blanche Lincoln, D-Ark., would also improve transparency of most derivative trades.
The legislation was approved on a 13-8 vote. Sen. Charles Grassley, R-Iowa, joined the panel's 12 Democrats in supporting the measure.
Lincoln's proposal is more sweeping than those offered by the Obama administration and the House.
Derivatives are financial products — such as corn futures or stock options— that rely on the value of some underlying investment. Companies use them to hedge against risks, such as interest rate swings or oil price spikes. But derivatives have become a vehicle for speculation, with critics blaming them for contributing to the financial crisis.
The measure is expected to be included in the financial overhaul bill in the Senate.
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