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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]

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Results for ba
Sleek Money
2 Sep 15 01:51:26
Traders Buy Boeing on Weakness $BA http://t.co/ZbJ6apG32k
Dow Stocks
2 Sep 15 00:18:26
#Dow #stocks $BA Boeing Co Daily:-2.48% Weekly:1.55% YTD:-1.35% Trend:25 / 100 http://t.co/aPnGfv301x
1 Sep 15 23:28:03
InvestorsMag’s Performances Since 08/22 ( Updated ) : http://t.co/NqLJTfI9mL … $AAPL $FB $MCD $HD $NKE $DIS $SPY $CVX $BA
1 Sep 15 23:26:29
InvestorsMag’s Performances Since 08/22 ( Updated ) : http://t.co/h4LtBys8GT $AAPL $FB $MCD $HD $NKE $DIS $SPY $CVX $BA ... 100% FREE !
1 Sep 15 19:27:02
$BA $IBM $UPS $AMZN: FAA approves startup to operate a giant fleet of drones: http://t.co/WF7EvKIKBN
1 Sep 15 19:10:02
$BA is rated BUY, 28.4% upside by Wall Street analysts based on average ratings/targets http://t.co/UbpwzuJQga http://t.co/f8gTijCUR2
Analyst Actions
1 Sep 15 18:59:01
$BA: Analyst action by Standpoint Research on Boeing: http://t.co/Ft2RrXqTjH http://t.co/TSQv5qegaX
Stock Market Picks
1 Sep 15 18:40:08
$AXP $BA $CAT $CSCO $CVX $DD $DIS Long and short positions from the Dow Jones, up to 1800% since 2008. http://t.co/sjQjlxfmsp $DJIA $DIA
Kyle Merrill
1 Sep 15 17:38:15
RT @MrJoshuaWhiting: #foodForThought ..Triggers ready for tomorrow's open. $SPY $COP $AAPL $BA http://t.co/693Dh1sTKy
Joshua W
1 Sep 15 17:02:55
#foodForThought ..Triggers ready for tomorrow's open. $SPY $COP $AAPL $BA http://t.co/693Dh1sTKy
Mike Phipps
1 Sep 15 16:41:30
like LIber’s thoughts but I look at the $BA Chart and see that big intra day drop that occurred last week and say are we headed there. @CNBC
1 Sep 15 15:59:22
Track news with various time frames for $DJIA under one watchlist $CVX $BA $IBM http://t.co/XzfPMrRVHT http://t.co/dWLGX0W3nI
1 Sep 15 15:24:24
End Of Day Scan: NR7-2 $HSP $GPRO $DISCK $JNJ $AEM $PFE $BYD $BA $POT $VOD http://t.co/VltdOIdgtt
FinSentS SP500
1 Sep 15 15:15:11
$BA:US Ujian kedua flaperon Boeing 777 disambung minggu depan #BOEING CO http://t.co/SIY70DQT69 #SP500
1 Sep 15 15:11:51
Breaking News
1 Sep 15 14:22:03
$BA: Russia Seeks Accord on New Wide-Body Plane With China This Year: http://t.co/d6QQLx4fjc
1 Sep 15 14:11:30
$BA Ruili finalizes order for 30 @Boeing 737 MAX
Stock Wire
1 Sep 15 13:45:48
John McCain worried about potential Boeing tanker delivery delays $BA http://t.co/W1LaCn65RE
1 Sep 15 12:37:02
RT @investorsCloud: Strangle Guys ! No Guessing , All Strangle Will Pay Off ... $NKE $DIS $BA $AAPL $SPY This Week / Next Week Expiration ,…
1 Sep 15 12:34:09
Strangle Guys ! No Guessing , All Strangle Will Pay Off ... $NKE $DIS $BA $AAPL $SPY This Week / Next Week Expiration , Few Bucks Out !
Market Int Center
1 Sep 15 11:05:34
Potential Boeing $BA Trade Has 5.55% Downside Protection ( http://t.co/571Mw1hfqt )
Ciaran McEvoy
1 Sep 15 10:08:37
How General Electric Could Shake Off China's Blues http://t.co/IzjDIM6mp9 $GE $BA $UTX
Mike Lewandowski
1 Sep 15 09:52:15
@petenajarian @HalftimeReport #GiddyUpPete Thoughts on where $BA is heading?
Daily Contracts
1 Sep 15 09:46:02
Real-Time feed of company contracts, original agreements and executive updates from $BA http://t.co/2wKP68Is8I
1 Sep 15 09:44:52
$TWTR $SPY $DIS $GPRO $BA computers really want to retest lows and they want 2 do it NOW!
Analyst Actions
1 Sep 15 09:18:02
$BA: Analyst action by Standpoint Research on Boeing: http://t.co/Ft2RrXqTjH http://t.co/9wnzP0kYbZ
Trade Followers
1 Sep 15 07:53:24
Warning. Biotech and leaders in yday's bearish list. $NFLX $IBB $TLT $GLD $GILD $YHOO $EEM $AMD $BIIB $STXS $BA $GDX https://t.co/uMN26yhv3h
Best Trader
1 Sep 15 07:49:09
@1BestTrader floor becomes the ceiling. $SPY $FB $GOOG $AMZN $NFLX $DPZ $AAPL $V $CSCO $BA $SBUX $MLNX $YELP $CLB $USO $TWTR $ADRX $MA $NTES
FinSentS Euro 600
1 Sep 15 07:27:53
$BA/:LN BAE to cut possibly more than 1,000 UK shipyard jobs #BAE SYSTEMS PLC http://t.co/r09qbYg6d4 #STOXX600
Stock Wire
1 Sep 15 07:21:44
Boeing Co (NYSE:BA) Expected to Report $2.11 $BA http://t.co/DnQH4yJCdb
FinSentS UK100
1 Sep 15 07:18:39
$BA/:LN BAE to cut possibly more than 1,000 UK shipyard jobs #BAE SYSTEMS PLC http://t.co/lmoZTLinz7 #LDN100
Sweet Platform
1 Sep 15 07:16:25
BA Top news - Sep 1st, 2015 $BA http://t.co/ZkmGRcrelh
Alexandros Yfantis
1 Sep 15 07:15:52
$AAPL $BA short only these two with stops at today highs. Bigger picture still bearish but will look to sell higher
FinSentS SP500
1 Sep 15 07:10:06
$BA:US Ujian kedua flaperon Boeing 777 disambung minggu depan #BOEING CO http://t.co/qE8gB5MxWD #SP500
1 Sep 15 07:04:59
S&P500 -2%, NW stox Microsoft $MSFT -2.65%; Amazon $AMZN -1.3%; Starbucks SBUX -2.29%; Boeing $BA -2.03%; Costco $COST -1.19%
1 Sep 15 06:59:12
$ANFI huge bounce play like $ACI. 100%+ upside potential P/E of 3 $BAC $BA $TWC $APA $CCL $FOX investors read http://t.co/L1jwUV6Bag
1 Sep 15 06:46:47
$BA $DIS $WMT $FB strong buys & for a more beta buy $FEYE $ULTA $HTZ
Trading Quotient
1 Sep 15 06:31:14
01 Sep 2015: Downtrend Stocks in Industrial Goods $ATI $BA $COL $FLR $GE $ITW $LLL $MMM $PCP $PH http://t.co/fFZETBnXwK
Alexandros Yfantis
1 Sep 15 06:28:56
$NKE $JPM $AAPL $BA I'm short but this scenario in $SPX if we bounce from 1910 will give me better prices to sell http://t.co/VenzQv6isH
Stock Market Picks
1 Sep 15 06:20:14
$AXP $BA $CAT $CSCO $CVX $DD $DIS Long and short positions from the Dow Jones, up to 1800% since 2008. http://t.co/sjQjlxfmsp $DJIA $DIA
1 Sep 15 05:56:56
Commented on: "Boeing's Current Outlook: Examining The Indian Aircraft Market" http://t.co/XJxzKhPFv5 $BA $EADSF
1 Sep 15 05:49:05
$BA $EBAY: Why Should You Buy These Stocks on Weakness? – eBay Inc …: http://t.co/17qvuu8rgk
1 Sep 15 05:29:11
RT @bored2tears: Coming down to earth: Pennsylvania #helicopter builders adjust to slower orders. http://t.co/n8iYeLOGdl $BA $LMT #aviation…
1 Sep 15 05:02:59
Track news with various time frames for $DJIA under one watchlist $CVX $BA $IBM http://t.co/XzfPMrRVHT http://t.co/n798u3f9Tk
1 Sep 15 04:17:03
$BA: Latin American Circus Lions Rescued, Returned to African Plains: http://t.co/WNAkEJmxtM
Sleek Money
1 Sep 15 03:21:30
Investors Buy Shares of Boeing on Weakness $BA http://t.co/ZESsexfN3j
Alexandros Yfantis
1 Sep 15 03:19:05
$BA shorted it yesterday at 130.50$ with 134$ stop. Broken trend line and back tested. Expecting to break 38% Fibo http://t.co/zzgAzedfjp
Breaking News Now
1 Sep 15 03:17:06
$BA: 10 questions with Scott Walker: http://t.co/UtrrUKIw3A
1 Sep 15 03:06:50
@528IR you have 10 different news tabs open for $BA $BABA? We give you 1 http://t.co/XdNd3D6b1A http://t.co/VKtC0sSPum
1 Sep 15 01:58:20
RT @InvestProfits: Boeing Company (BA) Down -7% from its 50 Day Moving Average http://t.co/T1M1gk6t4w $BA #investor #stocks #investing
By  +Follow October 2, 2013 9:01AM



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