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U.S. Senate Wants to Know Why Banks are Holding Physical Commodities

According to Reuters, A U.S. Senate committee will conduct a hearing next week to hear why banks should be able to hold physical commodities.

Many of the major banks do it. Goldman Sachs (NYSE: GS), JP Morgan Chase (NYSE: JPM), and Morgan Stanley (NYSE: MS) all hold physical commodities like gold and oil but some people believe that banks shouldn’t control stock piles that could artificially move the prices of these materials.

The hearing comes when the five year grace period that allows banks to hold these assets is set to expire before the end of 2013. Sen. Sherrod Brown (D-Ohio), a member of the banking committee, was reported as saying in the HuffingtonPost,

“When Wall Street banks control the supply of both commodities and financial products, there’s a potential for anti-competitive behavior and manipulation.”

 

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