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
Stock Wire
23 Oct 14 00:58:53
Boeing Co (NYSE: BA) Reports Consecutive Increase in Quarterly Profits; up by ... $BA http://t.co/tRsnaGA2t9
Sleek Money
23 Oct 14 00:38:04
The Boeing Company Sees Strong Trading Volume After Strong Earnings $BA http://t.co/o0mp06VKmm
James Sweeney
22 Oct 14 23:45:04
Morning Europe! Closing Bell #HappyHour 10/22 $DJIA down on #Ottawa Shooting #Oil at 2-yr low $CL_F Boeing $BA dives http://t.co/2HTt5Fo0V1
JS3 Multimedia
22 Oct 14 23:45:04
Morning Europe! Closing Bell #HappyHour 10/22 $DJIA down on #Ottawa Shooting #Oil at 2-yr low $CL_F Boeing $BA dives http://t.co/PFOuulpCCB
AskModernWallStreet
22 Oct 14 23:45:03
Morning Europe! Closing Bell #HappyHour 10/22 $DJIA down on #Ottawa Shooting #Oil at 2-yr low $CL_F Boeing $BA dives http://t.co/667dNHqI2a
Optietrading-Mischa
22 Oct 14 23:32:02
RT @SJosephBurns: RT @361Capital: Thorns in the Market Today: $IWM $USO $XLE $FEZ $BA $BIIB $NTRS $DFS $VMW $ECA $TUP $XRX http://t.co/ZRPW…
4-traders.com
22 Oct 14 23:25:08
Boeing : No Drag on Split Scimitar™ Winglet Developments http://t.co/9E6nm5YUgZ $BA
A. Leach
22 Oct 14 23:04:07
RT @StockSignaling: Movers and Shakers: Trading on Major News: $LL $DDD $VMW $IR $ABT $BIIB $TMO $IPG $USB $XRX $NBR $SNE $BRCM $DD $BA htt…
Kelly
22 Oct 14 23:01:22
RT @StockSignaling: Movers and Shakers: Trading on Major News: $LL $DDD $VMW $IR $ABT $BIIB $TMO $IPG $USB $XRX $NBR $SNE $BRCM $DD $BA htt…
Stock Signaling
22 Oct 14 23:01:19
Movers and Shakers: Trading on Major News: $LL $DDD $VMW $IR $ABT $BIIB $TMO $IPG $USB $XRX $NBR $SNE $BRCM $DD $BA http://t.co/Vtx6dLy0Nw
4-traders.com
22 Oct 14 23:00:30
Boeing : Out of the frying pan into the flyer http://t.co/oLCeWkXPtN $BA
winston
22 Oct 14 22:54:42
RT @IBD_ECarson: RT @IBDinvestors: Boeing production is booming - why does that bother investors? http://t.co/ABiJ10lHYL $BA
Stock Wire
22 Oct 14 22:51:56
The Boeing Company's (BA) CEO Jim McNerney on Q3 2014 Results - Earnings ... $BA http://t.co/dw1iQY2FtN
Tweeter!
22 Oct 14 22:41:05
#Boeing books first sales to #Iran since 1979 http://t.co/KOEVgamswF $BA
4-traders.com
22 Oct 14 22:36:15
Boeing : China cook up fuel plan http://t.co/dCW68EST2x $BA
NASDAQ
22 Oct 14 22:31:14
$BA - Safran Revenue Rises on Sustained Demand for Jet Engines http://t.co/lHlwpgREt9
4-traders.com
22 Oct 14 22:26:04
Boeing : Falling oil price and sell offs hit Wall St run http://t.co/Wi4UeQwe19 $BA $BIIB
4-traders.com
22 Oct 14 22:20:03
Safran Revenue Rises on Sustained Demand for Jet Engines http://t.co/bsHvnXRpdT $SAF $AIR $BA $GE $S3314 $S3258 $S3439 $LEAP
Penny Stocks Blog
22 Oct 14 22:05:04
RT @mediasentiment: $BA received a new alert. See why at http://t.co/5udYd0Ofs6 #stocks #markets #daytrading 23
Steve Burns
22 Oct 14 21:57:03
RT @361Capital: Thorns in the Market Today: $IWM $USO $XLE $FEZ $BA $BIIB $NTRS $DFS $VMW $ECA $TUP $XRX http://t.co/ZRPWXzKeOm”
Media Sentiment
22 Oct 14 21:50:00
$BA received a new alert. See why at http://t.co/5udYd0Ofs6 #stocks #markets #daytrading 23
Stock Wire
22 Oct 14 21:48:44
Boeing raises outlook as profit, sales beat $BA http://t.co/ig6F5BEKeF
SH
22 Oct 14 21:44:53
Unusual Opt Vol $T $DOW $DDD $BA $IBM $BX $LUV $KRE $NOK $YELP http://t.co/Try93oTQEC
esbolsa.com
22 Oct 14 21:28:23
#WallStreet: #DowJones -0,92%, en 16,461.32, #SP500 -0,73% en 1,927.11 y #Nasdaq -0.83%. Mejor valor: $TRV +1.42% Peor valor: $BA -4.46%
Hereitfirst
22 Oct 14 21:08:02
how to trade $AMZN $YELP $DDD $NXPI $GILD $RGLS $BA $GRPN $NLNK $UGAZ $FTNT $XLU $DVN http://t.co/uTZpFW8a4K
Stock Wire
22 Oct 14 21:03:50
Boeing Co (NYSE:BA) $BA http://t.co/YoXEwlXtCx
Valuentum Securities
22 Oct 14 20:51:57
RT @ValuentumBrian: For subs -- Eleven must-read Q3 earnings reports: http://t.co/BVnoCahpTU $DDD $ABT $T $BA $BRCM $KO $CLB $KMB $NSC $UTX…
Brian Nelson, CFA
22 Oct 14 20:51:36
For subs -- Eleven must-read Q3 earnings reports: http://t.co/BVnoCahpTU $DDD $ABT $T $BA $BRCM $KO $CLB $KMB $NSC $UTX $YHOO
TalkMarkets
22 Oct 14 20:48:11
#Inflation Or The Lack Thereof $BA $T $YELP $USB http://t.co/34JNlO9VJB
Marvin Clark
22 Oct 14 20:48:05
#Inflation Or The Lack Thereof $BA $T $YELP $USB http://t.co/baxawq0bMh
lisabeth donley
22 Oct 14 20:26:08
RT @cvpayne: Tonight on #Makingmoney Crude oil dilemma - buy or hide Gold coming off bottom- buy or wait Your questions $KO $INTC $CSX $BA…
Valentine
22 Oct 14 20:25:42
RT @cvpayne: Tonight on #Makingmoney Crude oil dilemma - buy or hide Gold coming off bottom- buy or wait Your questions $KO $INTC $CSX $BA…
Hotpage Business
22 Oct 14 19:48:14
#Boeing sells first parts to Iran since 1979 $BA - http://t.co/f0e6Ler4pd http://t.co/J9vFW6asx2
Hotpage
22 Oct 14 19:48:14
#Boeing sells first parts to Iran since 1979 $BA - http://t.co/hQZKMhZmcl http://t.co/c0L3BLI0t7
Ed Carson
22 Oct 14 19:34:04
RT @IBDinvestors: Boeing production is booming - why does that bother investors? http://t.co/ABiJ10lHYL $BA
Stock Wire
22 Oct 14 19:09:54
Passenger jets push Boeing's profit up 18 percent $BA http://t.co/LgebXs0XeY
Stock Wire
22 Oct 14 19:09:54
Boeing (BA): Stock With Unusual Social Activity $BA http://t.co/QhPvAr6kHt
Stock Wire
22 Oct 14 19:09:53
Boeing falls as forecast boost fails to ease 787 cost concerns $BA http://t.co/u63pVz5dPv
Full Disclosure
22 Oct 14 19:02:13
Boeing making small sales to #Iran http://t.co/kVFr7Xqugd $BA @cmschroed @WSJ
Chris Bailey
22 Oct 14 19:01:23
Today's wrap (a bit late!) includes a #population growth chart and thoughts on $EMC $VMW $BA $DOW & $T http://t.co/Ce5CNsmxJN
TalkMarkets
22 Oct 14 18:56:50
Boeing Beats On Q3 Earnings, Guidance Lifted Yet Again $BA $NOC $GD $LMT http://t.co/PrGIlHTYqy.
TalkMarkets
22 Oct 14 18:33:34
Morning Call $ABT $BA $DOW $BIIB $GD $NTRS $SPG $IPG $PH http://t.co/w2g3K6JdYQ
OptionsGeek
22 Oct 14 18:26:04
RT @paulwoll: $BA huge bearish engulfing candle.
4-traders.com
22 Oct 14 18:10:06
Asian shares hit by Wall St. fall, China PMI in focus http://t.co/axo3LWTH07 $BA $BIIB $S3258
4-traders.com
22 Oct 14 18:10:05
Asian shares hit by Wall Street fall, China PMI in focus http://t.co/IVNjBoxgPe $BA $BIIB $S3258
Privilege Physicians
22 Oct 14 18:07:27
RT @IBDinvestors: Boeing production is booming - why does that bother investors? http://t.co/UUZZe0cWNL $BA
TalkMarkets
22 Oct 14 18:03:33
Boeing Beats On Q3 Earnings, Guidance Lifted Yet Again $BA $NOC $GD $LMT http://t.co/PrGIlHTYqy
Bob Utsey
22 Oct 14 18:02:42
RT @IBDinvestors: Boeing production is booming - why does that bother investors? http://t.co/UUZZe0cWNL $BA
Media Sentiment
22 Oct 14 17:54:55
$BA received a new alert. Find out why at http://t.co/5udYd0Ofs6 #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 717
Chris Bailey
22 Oct 14 17:54:54
Boeing - getting more interesting. http://t.co/2otfi25zCd $BA
				
				
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.