Washington (CNNMoney.com) - One of the nation's top banking regulators has taken a swipe at what has become a signature piece of Senate Democrats' Wall Street reform package: cracking down on complex financial products.
Federal Deposit of Insurance Corp. Chair Sheila Bair said she's concerned that the Senate bill goes too far, in a letter sent Friday to the authors of the measure, Sens. Christopher Dodd, D-Conn., and Sen. Blanche Lincoln, D-Ark.
Bair is taking aim at a provision that blocks all banks from trading complex financial contracts called derivatives. The bill would force banks to spin off the desks that trade derivatives, known as swaps desks.
"One unintended outcome of this provision would be weakened, not strengthened, protection of the insured bank and the Deposit Insurance Fund, which I know is not the result any of us want," Bair wrote in the letter.
The provision in question is among key controversial hang-ups for lawmakers debating the Wall Street overhaul on the Senate floor this week.