Submitted by cpowell on 05:55AM ET Monday, August 5, 2013. Section: Daily Dispatches

Fed Should Reverse Commodity-Trading Policy, CFTC's Chilton Says

By Silla Brush
Bloomberg News
Monday, August 5, 2013

"The Federal Reserve regularly monitors the commodity activities of supervised firms and is reviewing the 2003 determination that certain commodity activities are complementary to financial activities and thus permissible for bank holding companies," Barbara Hagenbaugh, a Fed spokeswoman, said on July 19. She declined to elaborate.

Banks' ownership of commodity interests already has drawn scrutiny from the CFTC and the Securities and Exchange Commission, while U.S. Senate Democrats plan additional hearings on the issue.

CFTC Chairman Gary Gensler, declining to comment on specific investigations, said at a Senate hearing on July 29 that his agency has legal authority to pursue manipulation of markets for metals and other commodities. His agency has sent letters to companies asking them not to destroy documents relating to warehouses registered by exchanges such as the London Metal Exchange or Chicago Mercantile Exchange, according to a copy of the letter obtained by Bloomberg News.