The Senate’s top investigator will grill banks over their ownership of physical commodities and power plants, pipelines, and warehouses in a two-day hearing.
Carl Levin, D-Mich., announced Thursday that the Permanent Subcommittee on Investigations that he heads will hold the hearings on Nov. 20 and Nov. 21, a rare two-day series of hearings that will cap off what his office described as a two-year bipartisan investigation.
“Over the last five years, our largest banks and their holding companies have become deeply involved in a wide range of physical commodity activities in ways that pose risks to the U.S. financial system, U.S. commodity markets, U.S. businesses and families that use commodities, and U.S. taxpayers,” Levin said in a press release. “The objective of the hearing is to provide facts that have been missing from the public debate about the nature and extent of bank involvement with physical commodities and the impact and consequences of that involvement.”
Regulators have been concerned about banks’ involvement in the ownership, transportation and storage of commodities because of the fear that they could be manipulating markets. They have also shown concern that an accident, such as an oil train exploding while traveling through a city, could create a financial panic.
The witnesses for the hearing will not be announced until a few days before it begins. But only a handful of banks, including Goldman Sachs and Morgan Stanley, were grandfathered into a regulatory scheme that allows them to transport and store physical commodities. The Financial Times also reported last week that JPMorgan Chase remains involved in some physical commodities business.
The two-day event will cap Levin’s tenure in the Senate. The 80-year-old will retire in January.
The subcommittee’s gavel would have been passed over to Republicans in the new year anyway following the GOP takeover of the Senate in Tuesday’s elections. The current ranking member is Sen. John McCain, who is thought to have different priorities for the use of the subcommittee’s subpoena power from those of Levin, who focused particularly on some of the largest corporations in the country.
McCain said the upcoming hearings would be a chance to learn “the extent to which this involvement is appropriate for banks to engage in.”
