Regulatory Agencies Should Be Proactive, Not Just Reactive Robert A. Levine 7-24-13 A recent article of mine focused on the way banks were making huge profits by manipulating the commodities market (goo.gl/EhEEXD). A New York Times investigative reporter had written an in depth article that detailed the extensiveness of bank involvement with commodity trading, including ownership of storage and transportation facilities for aluminum, copper, and various other commodities. Given the banks’ knowledge of proprietary information about the status of these commodities and their ability to manipulate the market, prices for them rose and the economy was damaged. Since the Times report was issued, the Commodities Futures Trading Commission has begun an investigation of the banks ownership of storage facilities, pipelines, ports, oil tankers, and other infrastructure elements. Their objective is to learn how this has impacted the price of various commodities and its effect on consumers and the overall economy (goo.gl/3YYEQH). The Federal Reserve is also looking into the banks’ commodities businesses. J.P. Morgan is currently negotiating with government regulatory agencies over their manipulation of the electricity market and is apparently about to be hit with a fine of about half a billion dollars. Previously, the banks were fined for manipulating LIBOR rates. If there is a small opening that will allow banks to profit, they will find it, whether illegal or not. The problem with the regulatory agencies handling of various types of commodity manipulation by the banks is that they have been reactive to problems that exist instead of being proactive and preventing the problems from occurring. A Senate panel also began an investigation of the bank’s commodities business yesterday. If the current laws do not have enough teeth to allow the government agencies to control the banks’ practices in manipulating commodity trading, it is up to Congress to provide it to them. Additional personnel for these agencies to permit them to fully investigate violations should also be forthcoming. Information should not be derived from newspaper reports. Unfortunately, the Republicans in the House are looking to cut funding for these agencies which would give financial institutions free reign to bolster their profits at the expense of American citizens. Congress and federal regulatory agencies must play more of a proactive role in controlling the actions of banks in manipulating commodity prices to the detriment of consumers and the American economy. Resurrecting Democracy robertlevinebooks
Posted on: Wed, 24 Jul 2013 14:09:16 +0000
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