WASHINGTON, D.C. – On Wednesday, U.S. Sen. Sherrod Brown (D-OH), Chairman of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, will conduct a hearing entitled “Regulating Financial Holding Companies and Physical Commodities to examine the practices of federal regulators overseeing financial holding companies owning physical commodities – like aluminum or oil. The hearing will examine the current oversight of the Federal Reserve System, the Commodity Future Trading Commission, and the Federal Energy Regulatory Commission has in regulating nonfinancial activities by bank holding companies. 

In July 2013, Brown chaired a hearing of the Banking Subcommittee on Financial Institutions and Consumer Protections to shine a light on physical commodities operations at bank holding companies. Brown called for immediate action to crack down on these activities and urged federal regulators to increase their oversight of nonfinancial activities.  

According to a July 2013 article in the New York Times, many Wall Street megabanks hoard commodities and financial products and thereby drive up prices for consumers and manufacturers. The practice also creates a potential for anti-competitive market behavior and manipulation. The New York Times reports, "The maneuvering in markets for oil, wheat, cotton, coffee and more have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone." While the United Sates once separated banking from traditional commerce, today’s banks are now allowed to engage in a variety of non-financial activities, such as owning oil pipelines and tankers, electricity power plants and metals warehouses. Today, the six largest U.S. bank holding companies have 14,420 subsidiaries, only 19 of which are traditional banks.

Those testifying at the hearing:

  • Mr. Michael S. Gibson, Director, Division of Banking Supervision and Regulation, Board of Governors of the Federal Reserve System
  • Mr. Vince McGonagle, Director, Division of Market Oversight, Commodity Futures Trading Commission
  • Mr. Norman Bay, Director, Division of Enforcement, Federal Energy Regulatory Commission

A live stream of the hearing can be viewed HERE.

                        WHO:             U.S. Sen. Sherrod Brown

                                               

                        WHEN:          TOMORROW: Wednesday, January 15, 2014 at 2:00 PM EST

 

                        WHERE:        538 Dirksen Senate Office Building

                                                Washington, DC 20510

 

                        NOTE:            Live stream of the hearing is available at http://banking.senate.gov.

 

###