WASHINGTON Feb 25 Regulators should clamp down on banks owning metals warehouses, oil pipelines and other commodity assets, Democratic Senator Sherrod Brown told two nominees to the country's derivatives regulator on Tuesday.
Brown, a Wall Street critic who has campaigned against banks' physical commodity activities, urged the two to be tougher on the banks, ahead of their confirmation as members of the Commodity Futures Trading Commission.
"The CFTC must take a more aggressive stance to rein in these activities that threaten end users and consumers with higher commodity and energy prices," Brown said in a statement after meeting the two presidential nominees.
The CFTC is facing a shake-up this year after the departure of Gary Gensler, its headstrong former chairman. President Barack Obama has nominated Timothy Massad, a Treasury official, to succeed him.
Brown said he had met with Chris Giancarlo, a senior official at swaps broker GFI, and Sharon Bowen, a partner at law firm Latham & Watkins in New York, the two other nominees to become CFTC members.
Brown sits on the Senate Agriculture Committee, the body responsible for the CFTC, which will question the trio in a hearing to confirm them at the futures and swaps regulator. No date for a meeting has yet been set.
Banks like JP Morgan and Morgan Stanley have reduced their physical commodity activities under pressure from regulators and politicians, after a rapid build-up of the lucrative business on Wall Street in the 2000s.
The Federal Reserve, worried about the impact a catastrophe such as an oil spill could have on a bank it oversees, is planning to issue new rules that would make it less attractive for banks to be in the business.