logo  
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

Fed to Review Grandfather Laws that Allow Banks into Commodities

By  +Follow October 2, 2013 9:01AM
Share:
Tickers Mentioned:

In the wake of a late-July New York Times' article that offered compelling evidence that Goldman Sachs’ (GS) was leveraging its ownership of storage facilities in the metropolitan Chicago area in order to drive up the price of Aluminum, the Commodities Futures Trading Commission made some noises about an investigation.

The resulting furor led to a categorical denial on the part of Goldman, but perhaps it was no coincidence that only two weeks later, Morgan Stanley (MS)  sold off its own commodities business.

Now, however, the Federal Reserve is said to be stepping in with its own review of the physical commodities operations of the nation’s “too-big-to-fail” class of investment banks, according to an anonymous source close to the matter.

Fed Could Clamp Down

Indeed, the Fed is rumored to be undertaking an inspection of the legal and regulatory frameworks that originally permitted the aforementioned banks to be involved in commodities markets in the first place. The potential consequences of the Fed’s review could be quite far reaching, and could lead to the central bank rescinding a 2003 decision to make exceptions for certain lenders interested in basic materials.

According to “grandfather” laws passed as part of financial reform laws passed in the waning months of the Clinton Administration in 1999, any commodities operations held by banks prior to October 1997 would be “grandfathered,” in other words not subject to the new set of requirements and restrictions.

According to Karen Shaw Petrou, co-manager of the Washington-based Federal Financial Analytics policy research firm, the Fed is considering measures “to clear up grandfathering and how it fits merchant banking. While such banks have long traded derivatives tied to all manner of commodities, there has been a growing trend among these financial institutions of becoming involved to various degrees with the actual physical commodity itself, such as Goldman’s aluminum storage racket.

Should Big Banks Play a Role?

While some businesses and industry groups such as Boeing Co. (BA) and the Chamber of Commerce have contended that banks play an essential role in managing the risk that inevitably accompanies basic materials, critics say that under the current circumstances, it is simply too easy for these financial institutions to manipulate commodities markets to their own advantage.

Neither Goldman nor Morgan Stanley’s stocks were affected by the news, but either way Wednesday’s news is just one more item in a growing list that would seem to indicated the Federal Government is becoming far more serious about regulating the excesses of the industry.

 

 

[Image Courtesy of Wikimedia Commons]

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


Liked What You Read? Join Equities.com and Connect With Your Favorite Financial Experts FOR FREE! Members of Equities.com gain access to our leading financial news and content, active social investment community, proprietary research tools including the 2014 Small-Cap Stars, E.V.A. reports and more.

Results for ba
TickerChirp
23 Nov 14 14:08:05
Trending Tweets Pertaining to $BA (Boeing Co symbol BA) on 11/23/2014 http://t.co/ixucZwaX9a
Nelson Molina
23 Nov 14 14:06:27
$AAPL $BA $BABA $DKS $FB $FSLR $AMZN Puts this monster on your watch list for the end of the year. See video http://t.co/TthPDvroUh"
Briefing.com
23 Nov 14 13:17:11
#Technical #Scans $GOOG $AAPL $BA $BBRY $NFLX $HOT http://t.co/fQ3UdkApKi #Setups #pullback #trading #Doji #Overbought #Oversold #zippers
Michael Samhan
23 Nov 14 12:01:39
11-23-14 Trade Plan http://t.co/5judVZWHg1 $QQQ $IWM $AAPL $AKAM $ADBE $BIDU $MU $V $SBUX $DE $BA $MET $AA
4-traders.com
23 Nov 14 11:40:03
Federal Contracts Awarded to Companies in Arizona (Nov. 23) http://t.co/xAVtvsIoN5 $RTN $BA $HON
4-traders.com
23 Nov 14 11:40:02
Boeing : Federal Contracts Awarded to Companies in Missouri (Nov. 23) http://t.co/NnaFAXbdtR $BA
Tahiirr Malik
23 Nov 14 08:07:36
U.K., Israel Expand F-35 Orders Despite Costs, Delays http://t.co/maVyCaIJwb #IBDNews via @IBDinvestors $LMT $BA
FinSentS Euro 600
23 Nov 14 07:21:07
$BA/:LN BAE Systems : MILITARY $28.82 Million Federal Contract Awarded to BAE Systems #BAE SYSTEMS PLC http://t.co/hoZT6BqW95 #STOXX600
FinSentS UK100
23 Nov 14 07:15:25
$BA/:LN BAE Systems : MILITARY $28.82 Million Federal Contract Awarded to BAE Systems #BAE SYSTEMS PLC http://t.co/U6jNCvKXAz #LDN100
FinSentS SP500
23 Nov 14 07:08:00
$BA:US Boeing : MILITARY $93,026 Federal Contract Awarded to Boeing #BOEING CO http://t.co/tkU6IPzb8o #SP500
4-traders.com
23 Nov 14 04:30:09
Boeing : MILITARY $107,992 Federal Contract Awarded to Boeing http://t.co/jvgmHvlvTA $BA
4-traders.com
23 Nov 14 04:30:07
Boeing : MILITARY $57,733 Federal Contract Awarded to Boeing http://t.co/u5qn0AvdEm $BA
4-traders.com
23 Nov 14 04:30:06
Boeing : MILITARY $93,026 Federal Contract Awarded to Boeing http://t.co/E5Z80amsVV $BA
4-traders.com
23 Nov 14 04:30:05
Boeing : MILITARY $53,941 Federal Contract Awarded to Boeing http://t.co/NCemysjuIH $BA
4-traders.com
23 Nov 14 04:30:03
Boeing : MILITARY $40,128 Federal Contract Awarded to Boeing http://t.co/1lCjvha1cH $BA
4-traders.com
23 Nov 14 04:30:03
Boeing : MILITARY $41,624 Federal Contract Awarded to Boeing http://t.co/UyuzsTPduf $BA
4-traders.com
23 Nov 14 04:30:02
Boeing : MILITARY $63,348 Federal Contract Awarded to Boeing http://t.co/6Z5ibBG6rq $BA
4-traders.com
23 Nov 14 04:30:02
Boeing : MILITARY $133,170 Federal Contract Awarded to Boeing http://t.co/9rhEa9PVQF $BA
FinSentS Euro 600
22 Nov 14 15:21:48
$BA/:LN BAE Systems : MILITARY $212,400 Federal Contract Awarded to BAE Systems #BAE SYSTEMS PLC http://t.co/6zG4BmJOQt #STOXX600
FinSentS UK100
22 Nov 14 15:16:23
$BA/:LN BAE Systems : MILITARY $212,400 Federal Contract Awarded to BAE Systems #BAE SYSTEMS PLC http://t.co/69Db8eiZyF #LDN100
FinSentS SP500
22 Nov 14 15:05:18
$BA:US Boeing : MILITARY Vertical Stabilizer Ribs Sought by Defense Logistics Agency #BOEING CO http://t.co/mo8oSOiJBZ #SP500
Tom Cucolo
22 Nov 14 13:10:27
RT @McMcbillion43: $AAPL $BA $BABA $DKS $FB $FSLR $AMZN Puts this monster on your watch list for the end of the year. See video http://t.co…
Bonnie Lafleur
22 Nov 14 13:06:09
Looking for more info on $G $HOG $BA $IR #wealthmanagement http://t.co/duLWA2JBHE
Nelson Molina
22 Nov 14 12:18:16
$AAPL $BA $BABA $DKS $FB $FSLR $AMZN Puts this monster on your watch list for the end of the year. See video http://t.co/iFWCjIoIGa
RMilfold
22 Nov 14 11:40:57
RT @IBDinvestors: Lockheed Martin's Stealth F-35 Lights Up Foreign Sales Radar http://t.co/RM2EGNNbCx $LMT $BA http://t.co/sWH4xz8wiF
Shane Bolling
22 Nov 14 11:40:03
RT @valuewalk: 29% Of Largest Corporations Pay More To CEO Than Uncle Sam http://t.co/D535KEjVWL $C $BA $CHK $F http://t.co/lnl4PNyiM6
4-traders.com
22 Nov 14 11:05:09
Boeing : subcontractor gets 15 months for fraud http://t.co/X2g5OjwLNF $BA
GuruFocus
22 Nov 14 11:04:52
Is Boeing Building A New Strategy To Win Over Airbus’ A320 Family? http://t.co/d6tuFV2eb3 $EADSY $BA http://t.co/gkf31lfXVP
GuruFocus
22 Nov 14 10:59:45
Airbus’ Offering Tough Competition To Boeing http://t.co/JbNgPoKKgT $EADSY $BA $DAL http://t.co/OHeXhXBlkh
Matt Soleyn
22 Nov 14 09:01:40
Delta flight 394, a #Boeing 737, slid off the runway landing at #DTW this morning. No injuries, but major #travel delays caused. $DAL $BA
FinSentS Euro 600
22 Nov 14 07:24:58
$BA/:LN BAE Systems : MILITARY $212,400 Federal Contract Awarded to BAE Systems #BAE SYSTEMS PLC http://t.co/6tA2Thmc8S #STOXX600
FinSentS SP500
22 Nov 14 07:20:24
$BA:US Boeing : MILITARY Vertical Stabilizer Ribs Sought by Defense Logistics Agency #BOEING CO http://t.co/RokTwS18z6 #SP500
FinSentS UK100
22 Nov 14 07:17:16
$BA/:LN BAE Systems : MILITARY $212,400 Federal Contract Awarded to BAE Systems #BAE SYSTEMS PLC http://t.co/bMBy0u2KFV #LDN100
FonsieTrader
22 Nov 14 07:04:56
Moved Upper Bollinger Band 1/5 $AA $ABBV $ABEV $ACAD $ADSK $ALKS $AMRN $ANSS $AOS $APO $APU $ASNA $ASX $ATI $BA $BAK http://t.co/grTEr1YCUA
Derald Muniz
22 Nov 14 06:41:37
Trade Idea for $BA: go Long the January 2015 $135 Straddle for $4.25 debit (this trade has 2 months to work, Up or Down).
Derald Muniz
22 Nov 14 06:34:44
Boeing took a peek into this B/O Box area on Friday. If L be mindful of the RSI probing 70. $BA http://t.co/NiXRT6VIBQ
4-traders.com
22 Nov 14 04:40:13
Boeing : MILITARY Vertical Stabilizer Ribs Sought by Defense Logistics Agency http://t.co/CuaTH5avK0 $BA $NOC
4-traders.com
22 Nov 14 04:40:12
Boeing : MILITARY Left Hand Tip Splices Sought by Defense Logistics Agency http://t.co/ytiPgfaEdD $BA
4-traders.com
22 Nov 14 04:40:12
Boeing : MILITARY Aircraft Wiring Harnesses Sought by Defense Logistics Agency http://t.co/NuGpVYvVgI $BA
4-traders.com
22 Nov 14 04:40:11
Boeing : MILITARY Aircraft Skins Sought by Defense Logistics Agency http://t.co/FVQzx4bcD5 $BA
4-traders.com
22 Nov 14 04:40:11
Boeing : MILITARY Aircraft Access Covers Sought by Defense Logistics Agency http://t.co/OXk9VS9zmS $BA
4-traders.com
22 Nov 14 04:40:09
Boeing : MILITARY Air-conditioning Duct Assemblies Sought by Defense Logistics Agency http://t.co/m0xiDD7r96 $BA
4-traders.com
22 Nov 14 04:40:05
Boeing : MILITARY Aircraft Fuselage Parts Kits Sought by Defense Logistics Agency http://t.co/ji6RhrUeEh $BA
4-traders.com
22 Nov 14 04:40:05
Boeing : MILITARY Landing Parts Kits Sought by Defense Logistics Agency http://t.co/AjtP7z13q0 $BA
4-traders.com
22 Nov 14 04:40:04
Boeing : MILITARY Structural Fittings Sought by Defense Logistics Agency http://t.co/BmrZxOnSQ2 $BA
4-traders.com
22 Nov 14 04:15:05
Boeing : awards AVIC contract for 777 empennage tips http://t.co/zo9QVZ04jD $BA $0161
4-traders.com
22 Nov 14 03:55:04
Boeing : #MakeItInPA: Governor Corbett Announces Boeing to Expand in Fayette County http://t.co/A5JvoQRknP $BA
Michele Carretta
22 Nov 14 03:39:30
$TXT $BA : DoD will dismiss the entire OH-58D fleet & cover specific role with UAV/Apache 50% more expensive in mission but less to maintain
12Stocks.com
22 Nov 14 03:01:48
Weekly S&P100 #Stocks Trend $LOW $ABBV $KO $EMR $UTX $MET $SBUX $DD $FDX $HON $PEP $RTN $TGT $INTC $BA $MON @ http://t.co/GA0wxE19nM
12Stocks.com
22 Nov 14 03:01:15
Weekly Dow #Stocks Trend $KO $UTX $DD $TRV $INTC $BA $V $CSCO $WMT $NKE $HD $GE $MCD $PG $PFE $UNH $MMM $CAT @ http://t.co/TvzJfdisOX
				
				
By  +Follow October 2, 2013 9:01AM
Share:

Comments

 

blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.