Ohio senator calls for crackdown on banks, LME

Jul 25, 2013 | 03:35 PM | Michael Cowden

Tags  Alcoa, Sherrod Brown, aluminum, London Metal Exchange, Beer Institute, crackdown, Mary Jane Saunders, U.S. Senate Federal Reserve

CHICAGO — Changes are needed at the London Metal Exchange, many market players agree, with one U.S. senator calling for a regulatory crackdown on banks owning aluminum warehouses as Alcoa Inc. urges increased transparency at the exchange.

Sen. Sherrod Brown (D., Ohio), chairman of the Senate Banking Committee’s subcommittee on Financial Institutions and Consumer Protection, wants to see the U.S. Federal Reserve issue "clear guidance" on bank holding companies and non-bank activities, such as involvement in physical commodities operations, which he said saddles both banks and taxpayers with too much risk.

The U.S. Commodity Futures Trading Commission (CFTC) also should "crack down" on "anticompetitive practices," such as banks owning aluminum warehouses, Brown said, adding that bank holding companies, "by hoarding physical commodities" such as aluminum, drive up costs of both commodities and everyday products such as soft drinks and beer.....

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