LME rules, banks’ roles are blasted at hearing

Jul 23, 2013 | 05:57 PM | Michael Cowden

Tags  Senate hearing, banking committee, Timothy Weiner, MillerCoors, Saule Omarova, UNC Chapel Hill, Goldman Sachs, Metro International LME

CHICAGO — Big banks’ role in physical commodities markets came under fire at a U.S. Senate hearing July 23, with London Metal Exchange aluminum warehouses in Michigan facing sharp criticism from lawmakers.

MillerCoors LLC currently waits a year to 18 months to get metal out of LME warehouses in the Detroit area, according to Tim Weiner, the company’s global risk manager for commodities and metals. "Imagine a warehouse with a huge door marked ‘in’ and a tiny door marked ‘out,’ " Weiner said, blasting LME rules, premiums paid by warehouses to attract metal and high rents charged to customers.

Such factors drive up prices for consumers and stymie end-user innovation, costing MillerCoors tens of millions of dollars every year and other end-users billions, Weiner said. MillerCoors has approached the LME about its concerns, but only minor changes have been proposed that "do not go far enough, fast enough" or correct underlying problems such as bank stakes in warehouses and their role in shaping LME policies, he said.....

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