Goldman Sachs and other Wall Street fat cats are engaging in a terrible practice: they're creating products, selling them to their consumers and then betting that those products fail. When they fail, the fat cats make out like bandits and their customers are holding the bag. Senator Carl Levin wants to protect consumers from this disturbing practice.

Lawmakers are considering legislation that would ban investment banks from betting against their customers in many circumstances, in a further ripple effect for Wall Street from Goldman Sachs's troubles.

In a statement to The Wall Street Journal, Sen. Carl Levin (D., Mich.) said he is drafting legislation to prevent conflicts of interest by "prohibiting companies from taking the opposite side of the deal for their own account," at least when they are marketing investments they have created themselves.

Mr. Levin and his co-sponsor, Sen. Jeff Merkley (D., Ore.), are aiming to propose an amendment as soon as Monday to the financial-overhaul bill being debated in the Senate.

At a Senate hearing last month in which senators grilled Goldman executives, Mr. Levin focused much of his scrutiny on a handful of deals where he said that Goldman was both constructing subprime-mortgage securities and effectively betting they would fall in value.

Those deals, which carried names like Timberwolf and Hudson, are somewhat different from a 2007 transaction called Abacus that is the subject of civil-fraud allegations by the Securities and Exchange Commission. In Abacus, a hedge fund, rather than Goldman itself, took the "short" side of the transaction, betting the mortgages would decline.

In all of the transactions, a fundamental issue is how much obligation Goldman had—or should have had—to protect its customers' interests. At the Senate hearing, Goldman witnesses frequently spoke in general terms of the firm's role as a "market maker," someone who matches buyers and sellers and can take positions on his own. A market maker's duty to customers is limited.

Mr. Levin says that despite the firm's rhetoric, Goldman's role in the deals under scrutiny was as a securities underwriter or "placement agent," which carries a broader obligation to disclose details about the product. Goldman Sachs doesn't disagree that it was a placement agent in those transactions.

In Timberwolf and similar deals. Mr. Levin says Goldman failed to provide a "full, fair and honest" accounting of its interests.

Corrupt practices by banksters are bringing our economy to it's knees. It's time to pass legislation to bring transparency to the market and protect consumers from these predatory tactics.

Wall Street is gambling with our money and our economy. And, they've rigged the game to make sure they win. Watch:

Tom McMahon explains the ad:

Wall Street CEOs legalized gambling through something called ‘derivatives,’ making bets on bets on bets. But when their luck ran out, it was our money they lost – our homes, our investments. And as this house of cards came tumbling down on Wall Street, millions on Main Street lost their jobs and trillions in retirement savings disappeared. President Obama has laid out a clear path for real financial reform that will protect working families and small businesses and now it’s time the Senate to move the plan forward.

The right wing wants to let Wall Street continue to take risky bets with our economy. We can't let that happen. The time is now to change Wall Street.