This morning, Treasury Secretary Tim Geithner sent a letter to the Senate to “express the Administration’s strong opposition” to a proposed amendment that would impose sanctions on countries and entities that deal with the Central Bank of Iran, Bank Markazi.
Geithner says that the amendment would undermine the multilateral efforts that have been put in place by the White House to isolate Iran:

Rather than motivating these countries to join us in increasing pressure on Iran, they are more likely to resent our actions and resist following our lead – a consequence that would serve the Iranians more than it harms them.

If passed, Geithner writes, the measure “could have the opposite effect from what is intended and increase the Iranian regime’s revenue, literally fueling their suspect nuclear ambitions.”
Fears of an Iranian oil embargo, the practical effect of the Senate amendment, have driven oil prices up significantly over the past week.  The measure could threaten the European economy and not just increase Iran’s oil profits, but benefit China and Russia.  The U.S. Chamber of Commerce has also strongly opposed the Senate measure, which could raise gas prices in the U.S. as well.
An oil embargo measure is reportedly being blocked at today’s European Union meeting due to concerns that such a measure would threaten Greece’s teetering economy and risk throwing the Eurozone into recession.
Nonetheless, the amendment is expected to come to a vote before the Senate later today as part of the debate on the annual National Defense Authorization Act.  NIAC has opposed central bank sanctions, noting that such measures are the broadest, most indiscriminate sanctions possible that will continue to punish ordinary Iranians for the actions of the regime.  Similar sanctions were put in place against Saddam Hussein’s Iraq and only contributed to immense humanitarian suffering that failed to punish the regime, and ultimately only ended in war.
Administration officials testified before the Senate Foreign Relations Committee this morning, reiterating objections to efforts in the Senate and House to force the President to issue sanctions against Iran’s central bank.  The Administration says they share the same goals as the Senate in isolating Iran, but that a reckless approach that divides international unity and benefits Iran politically and financially is counterproductive.  They were harshly rebuked by the amendment’s lead sponsor, Senator Robert Menendez (D-NJ).