Senate Scrutiny of Bank Commodity Holdings Has Levin’s Backing
U.S. Senator Carl Levin, the Michigan Democrat who leads the Permanent Subcommittee on Investigations, said lawmakers may use subpoena power to examine banks’ trading and ownership of physical commodities.
“We have been into this issue for a long time and it’s a very, very significant issue,” Levin said in an interview today after a Banking subcommittee hearing led by Senator Sherrod Brown on whether power plants and oil refineries should be owned by financial holding companies such as JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS) and Morgan Stanley. (MS)
The potential for conflicts of interest and manipulating prices to benefit their proprietary holdings “is huge,” said Levin, whose subcommittee held hearings over Goldman Sachs’s packaging and sale of toxic mortgage-backed securities and JPMorgan’s “London Whale” trading losses.
“I’m very, very glad that Senator Brown’s subcommittee got into it today,” Levin said. “He and I have talked and he is hopefully going to continue and we’re going to continue looking as we have I think six months or a year.”
Levin said he may hold hearings in his own subcommittee if he isn’t satisfied with the outcome of Brown’s effort.
“We don’t want to duplicate what he’s able to do,” Levin said, noting that Brown’s subcommittee doesn’t have subpoena power while his does. “It may depend on what their hearings produce and what any additional information we’re able to produce because of the easier availability of subpoena power.”
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