Sens. Carl Levin, D-Mich., and Jeff Merkley, D-Ore., are drafting legislation that would under certain circumstances prevent investment banks from betting against their clients. At a recent Senate hearing, Levin scrutinized deals that he said show Goldman Sachs developed securities, sold them to clients, then bet that those securities would decline in value. Goldman executives defended their actions, explaining that the firm's role was as a "market maker."

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