Wall Street , together with some major U.S. producers opposed the possible new restrictions on banks on the commodities market .
Thus , the Fed could face serious opposition from the banks and the real sector. A variety of companies from Goldman Sachs to Boeing this week signed the letter, which was sent to the Federal Reserve .
The report said that the additional restrictions that the regulator plans to introduce the banking sector on trade of various goods, including natural gas and metals make trades in these markets inefficient.
The fact that banks are an important component that helps members of the real sector to hedge their risks and engage in other transactions with commodity assets.
It is worth noting that while the Fed did not voice any new restrictive measures , but the earlier representatives of the Central Bank stated that they are considering options . Recall that for 15 years the Fed permitted banks to own physical raw materials, as well as various related assets, such as power plants or special warehouses.
Among the possible restrictions : restrictions on banks’ profits from operations with raw materials or restrictions on ownership of physical inventory of a commodity asset that can look like a requirement for the creation of additional reserves for such assets .
The Fed said in January that closely examines the banks’ participation in trade in raw materials . According to the regulator , such operations carry too much risk and jeopardize the financial stability of the institutions. As an example, the Fed cited the case of the accident at the nuclear power plant in Japan and the explosion of a gas pipeline in California several years ago. The Fed argues that those events have made major changes in the pricing environment of these goods, which carries a huge risk for banks holding the raw material.
Another reason for the ban began an investigation , during which it was revealed that the company’s financial manipulated electricity prices , aluminum and other products . Banks however rejected these ads, that , in fact, is not surprising.
Ohio senator spent on this issue a number of meetings and urged the Fed to act immediately.
On the background of intense scrutiny by the various regulatory bodies , some banks , such as , JP Morgan, said the sale of its units trade in raw materials . By the way , JP Morgan agreed last year to pay a fine of $ 410 million for the manipulation of the electricity market.
But other representatives of Wall Street , for example Goldman Sachs and Morgan Stanley, remain in the market. Both banks on Thursday reported an increase in sales from the work in the commodity markets .
According to the law the Gramm-Leach from 1999 banks could engage in operations with raw materials without any permission from the regulator .
The intrigue is that amid public pressure and the Fed may refrain from imposing restrictions . In this case , if the banks can safely continue their activities in the commodities markets , it is possible that the market will revive commodities again and we will be witnessing quite powerful movements .
By the way , the letter was also signed and several dozen ordinary people , which in itself is unusual .