Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?


Fed to Review Grandfather Laws that Allow Banks into Commodities

By  +Follow October 2, 2013 9:01AM
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]

Results for ba
Mind Equity
20 Apr 14 03:15:20
$NOW Should you buy $RDC $BA $FB #overvalued http://t.co/jYqebhGlbH
Darryl Kendal
20 Apr 14 02:01:25
#Stock Watchlist. Dont be left behind $XRAY $BA $UNM $LIVE #money http://t.co/X5vpHOK8gh
Franco Gall
20 Apr 14 01:57:07
$BA Bearish or Bullish on these #stocks $T $AWK $LIVE Try this http://t.co/1QNIZWebtf
20 Apr 14 01:19:04
$BA Turkmenistan plans to sign another contract with Boeing company http://t.co/XqpZHSmXJ0
Teodor Gareth
20 Apr 14 00:44:10
$BA Turkmenistan plans to sign another contract with Boeing company http://t.co/diXRf0XvBV
Stock Wire
20 Apr 14 00:41:20
Turkmenistan plans to sign another contract with Boeing company $BA http://t.co/aCLJIUmO2j
19 Apr 14 20:54:33
RT @theflynews: $BA Boeing reports 5 new orders since last update, cuts 737 net orders by 5: Full Story http://t.co/3J9HJUmlrR
19 Apr 14 20:15:02
Boeing : Saints take 2-1 lead http://t.co/Zs5Silz06f $BA
19 Apr 14 19:39:18
$ba =still better to avoid, probably needs more rest after straight line higher since march 2013 http://t.co/HhEOOSFIkm
Bettie Pagan
19 Apr 14 18:50:31
$BA Free research on $AWI $SON $DUST #financial http://t.co/B4ZeSNdEAF
19 Apr 14 18:42:15
$BA Should you buy $AVT $FNF $QLYS #wealthmanagement http://t.co/TMS1L1icVm
Insider Trade Alerts
19 Apr 14 17:42:04
$BA [$$] Preview http://t.co/4FKP3A04eo
Franco Gall
19 Apr 14 15:53:50
$HFC Buying or selling? $ONXX $BA $QLYS Try this http://t.co/NJ80I3qUKp
19 Apr 14 13:17:33
$BA Chicago's $20 million club http://t.co/r8tZtdOoaY
19 Apr 14 12:23:37
Boeing Company (BA) 127.92 $BA Boeing's Growler Takes Aim at Lockheed Martin's F-35 Katie Spence, The Motley F http://t.co/azAJnf26yJ
19 Apr 14 10:48:34
$BA 3 Reasons We Remain Bullish on Boeing http://t.co/nw8oBolvte
Absolute Allah
19 Apr 14 10:41:44
Great names reporting next wk. $NFLX, $HAL, $MCD, $CREE, $FB, $MSFT, $PHM, $VZ, $MMM, $BIDU, $CAT, $LLY, $YUM, $AMGN, $QCOM, $BA, $UA, $P...
Teodor Gareth
19 Apr 14 09:16:03
$BA 3 Reasons We Remain Bullish on Boeing http://t.co/7Xf8gaXYxv
19 Apr 14 09:13:44
Pentagon warns of major cuts due to sequestration $BA http://t.co/vsF7WzRF2H
Stock Wire
19 Apr 14 09:13:24
3 Reasons We Remain Bullish on Boeing $BA http://t.co/FqjOk9wLNq
Stock Herald
19 Apr 14 08:06:09
$BA: Boeings Growler Takes Aim at Lockheed Martins F-35 http://t.co/7IU0xqra7t
19 Apr 14 07:21:05
$BA Boeing's Growler Takes Aim at Lockheed Martin's F-35 http://t.co/K8zsdasMHH
19 Apr 14 07:18:31
@kaylatausche @peterschack $BA will be at $200 in 18 months
Small Cap Updates
19 Apr 14 07:13:14
$WDC Seeking the next stock like $GHC $BA $CLF #personalfinance http://t.co/pww846epNT
19 Apr 14 07:11:34
$BA: Boeings Growler Takes Aim at Lockheed Martins F-35 http://t.co/V7l1aH1ArP
19 Apr 14 07:06:34
$BA - Boeings Growler Takes Aim at Lockheed Martins F-35 -> http://t.co/8orZQv73pW #stock #stocks #stockaction
19 Apr 14 06:43:58
$TSCO Awesome #Stock #Research $TECH $BA $IR #personalfinance http://t.co/8CsLwM8YJR
Eric M. Vihlen
19 Apr 14 06:18:07
19 Apr 14 06:13:33
Year-to-date Dow #Stocks Trend $JNJ $UTX $CSCO $T $PG $XOM $CVX $KO $MMM $TRV $GE $BA $WMT $NKE $INTC $MRK $DIS @ http://t.co/6KoVUcHkIF
Stock Market News
19 Apr 14 06:11:42
Todays Stocks you should Watch $MJN $BA $EV $AAPL #personalfinance http://t.co/EoHgYYiiT3
19 Apr 14 05:58:29
Apr/17 Close - Total Net +$1.09 // $AAPL $BA Risk // 💥 History of Positions ➡ ➡ #DynamicChartsPositioning ✅ http://t.co/hqrjvME1aT
Stock Herald
19 Apr 14 05:35:05
$BA: [$$] Preview http://t.co/n2o7CDETLk
Stock Herald
19 Apr 14 05:17:34
$BA: [$$] Preview http://t.co/8xTopMznE4
Hans Hoskins
19 Apr 14 05:03:20
$BA Get more info on $APH $HRL $YOD Check out http://t.co/VuQU07ZcMC
19 Apr 14 04:17:37
$BA: [$$] Preview http://t.co/x0jRRqtwJP
Investor Wand
19 Apr 14 04:16:21
New recommendation from Joseph Nadol of JPMorgan for $BA is worth $162:http://t.co/rn3hVs88yT
Esau Braxton
19 Apr 14 04:11:36
Are you thinking of selling $BEAM $BA $BK $GAIN Worth a look http://t.co/IN2QvnKhP1
Mind Equity
19 Apr 14 04:10:42
Looking for the next $RDC $BA $MTB $SLV #equity http://t.co/iWXYCjly8k
Franco Clark
19 Apr 14 03:22:59
Find more winners like $WTR $BA $WIN $CHTP Give it a try http://t.co/TwB9CNO92t
19 Apr 14 03:20:07
$BA Jet rescinds order for 17 Boeing aircraft http://t.co/ONu6HwvbBD
Stock Herald
19 Apr 14 02:51:05
$BA: [$$] Preview http://t.co/8xTopMznE4
19 Apr 14 02:47:04
$BA Aerospace Professionals Denied SPEEA-Representation by Boeing to Share ... http://t.co/tG9j051miT
Stock Herald
19 Apr 14 02:45:35
$BA: [$$] Preview http://t.co/Dgnc13xlB5
Teodor Gareth
19 Apr 14 02:38:33
$BA Boeing Co. to give $47 million in back pay to current and former Southern ... http://t.co/FEjq1xkFpF
Stock Wire
19 Apr 14 02:35:42
Boeing Co. to give $47 million in back pay to current and former Southern ... $BA http://t.co/8EfgOkjyuw
Stock Herald
19 Apr 14 02:35:05
$BA: [$$] Preview http://t.co/PxZwMh1x7a
Stock Herald
19 Apr 14 02:13:07
$BA: [$$] Preview http://t.co/9TwcHGM8Hb
19 Apr 14 01:52:04
$BA After 14-year fight, Boeing must pay $47M to Calif. engineers http://t.co/E8BpFsv4oU
19 Apr 14 01:51:35
$BA: [$$] Preview http://t.co/URPEQstzsg
By  +Follow October 2, 2013 9:01AM



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.