WASHINGTON –-(ENEWSPF)–November 21, 2014. Oregon’s Senator Jeff Merkley released the following statement after the U.S. Senate Permanent Subcommittee on Investigations released a report and held hearings finding that Wall Street banks have become heavily involved in the ownership and control of physical commodities, raising the potential for market manipulation. The commodities involved touch nearly every consumer and every corner of the American economy, such as oil, natural gas, and aluminum.
“This report is extremely disturbing and raises many questions about why financial regulators were not aggressively investigating and acting on these issues long before now.
“If a bank owns enough of a commodity to control the supply and demand of a product, and at the same time is profiting from trades on that product, it’s obvious that there’s a massive potential for market manipulation. Now we know it’s not just potential, but reality. As this report reveals, Goldman Sachs manipulated the supply of aluminum at the same time as they were trading it. This type of market manipulation has real costs for our businesses and consumers, and it’s unacceptable. Big banks shouldn’t be able to rig the economic playing field in their favor at the cost of our economy and our middle class families.
“There are many other alarming details contained in this report, including banks’ extensive involvement in the energy sector and the massive risks that banks’ positions in physical commodities could pose to their own stability and to our economy as a whole. This report should serve as a serious wake-up call to regulators to get our banks out of the oil tanker and aluminum warehouse business and back into the banking business, taking deposits and making loans to families and businesses.”
Merkley highlighted banks’ involvement in commodities in Oregon in 2012, and earlier this year sent a comment letter to the Fed urging them to close the loopholes that allow banks to own physical commodities.
In a separate hearing today, Merkley questioned William Dudley, the President of the Federal Reserve Bank of New York, on whether the Federal Reserve should continue to allow banks to own and control physical commodities. Video of that hearing can be found here.
Source: merkley.senate.gov
