US senators question banks’ role in commodities
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Wednesday 24 July 2013
A US Senate hearing turned the spotlight on the role of big banks in the trading of key commodities yesterday, with one lawmaker questioning the extent to which lenders engage in the market for physical commodities.
“What do we want our banks to do – make small business loans or refine and transport oil? Issue mortgages or corner the metals market?” Sherrod Brown said at a Senate subcommittee hearing on the matter.
The hearing came against the backdrop of a growing focus on the activities of large banks such as Goldman Sachs and JP Morgan in the commodity markets. The banks were not part of yesterday’s hearing in Washington.
Mr Brown, a Democratic Senator from Ohio, said more transparency was needed to understand the role and influence of banks in the commodity markets. “Taxpayers have a right to know what is happening and to have a say in our financial system,” he said.
Tim Weiner, a global risk manager at the brewing giant MillerCoors, which uses aluminum in the production of cans, told senators in his prepared statement that aluminum prices had been inflated and called for more regulatory oversight of the London Metal Exchange (LME). “We simply ask for the same regulatory and legislative oversight of the LME that other US futures exchanges receive in order to level the playing field,” he said.
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