Democrats are taking one last whack at banks and regulators before they relinquish power in the Senate.
In hearings Thursday and Friday, Democratic-run committees will probe into banks’ involvement in running physical commodities businesses and also examine whether they exert too much influence over their regulators.
The hearings come as Senate Democrats push other efforts to tighten Washington’s control over Wall Street amid concerns that banks remain too big to fail six years after the financial crisis.
Before his retirement at the end of the year, Sen. Carl Levin, D-Mich., has scheduled hearings Thursday and Friday to examine banks’ ownership of businesses such as coal mines, aluminum warehouses and oil transportation.
The 80-year-old chairman of the Permanent Subcommittee on Investigations, known for tough inquiries into big businesses, released a 400-page report Wednesday afternoon detailing surprisingly risky lines of business big banks are involved in and calling for a regulatory crackdown.
Bank involvement in commodities includes Goldman Sachs employees running a uranium business and delivering uranium to nuclear power plants, Morgan Stanley managing an oil transportation and storage network, and JPMorgan Chase running dozens of power plants. The businesses expose banks to unusual risks, the subcommittee report found.
Bartlett Naylor, financial policy advocate for Public Citizen and a former congressional investigator, commended Levin for looking into banks’ physical commodities businesses and his track record of probing into bank misconduct. Levin “established a high standard for investigation of critical areas affecting Americans. This legacy will, unfortunately, be difficult to match in the future,” Naylor said.
The liberal Ohio Democrat Sen. Sherrod Brown will hold a hearing investigating whether the Federal Reserve Bank of New York, the primary regulator of Wall Street banks, is too subservient to banks.
That hearing, at which New York Fed President William Dudley will testify, was prompted by a report by a whistleblowing Fed examiner at Goldman Sachs that included secret recordings of regulators interacting with bankers. Critics said the recordings suggested a culture of subservience that allows banks to go on with risky practices.
The hearing was approved by Senate Banking Committee Chairman Tim Johnson of South Dakota, who is also retiring.
Sen. Jack Reed, D-R.I., introduced a bill earlier this week that would strengthen congressional oversight of the New York Fed by making its president a presidential appointee.
Regional Fed bank presidents are chosen by the bank’s board members, who are usually representatives of the area’s business finance community. The New York Fed president carries out the agency’s monetary policy operations and has a permanent voting seat on the Fed’s monetary policy committee. Reed’s bill would make that position subject to Senate approval.
Meanwhile, the Senate Democrats’ top Wall Street critic, Massachusetts Sen. Elizabeth Warren, drew notice this week for coming out against one of President Obama’s nominees for a top Treasury position. Warren said she would oppose Antonio Weiss as under secretary for domestic finance because of his background as an investment banker — just days after Senate Democrats created a new leadership position for her.
She was joined by the No. 2 Democrat in the Senate, Dick Durbin of Illinois, Bloomberg News reported.
Democrats will cede control of the upper chamber to Republicans in January, losing discretion over nominations and legislation.
