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UPDATE 1-US Senate likely to bar banks' high-risk trades -Levin

WASHINGTON, May 10 (Reuters) - Banks would be barred from high-risk speculative trading under a measure that has an "extremely good" chance of becoming law, Democratic U.S. Senator Carl Levin said on Monday. The measure also would require large nonbank institutions to set aside additional capital to cover the risks of speculative activity, and prohibit financial firms from betting against their customers. It would toughen a sweeping rewrite of financial regulations currently being debated in the Senate. Levin and fellow Democratic Senator Jeff Merkley said their proposal has wide support among Democrats, in particular Banking Committee Chairman Christopher Dodd, who is overseeing the legislation. "We are confident that this will be voted on, and we are confident that we'll have not just Senator Dodd's support, but with that support have an extremely good chance of passage," Levin said at a news conference. (Reporting by Andy Sullivan, editing by Jackie Frank) Keywords: FINANCIAL REGULATION/LEVIN (andy.sullivan@thomsonreuters.com; +1 202 898 8391; Reuters Messaging: andy.sullivan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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