Goldman Sachs Group Inc (GS.N) reaffirmed its intent to remain in the commodities trading business, deeming it "too important" to clients to exit, a top executive said on Thursday.
The bank's restated determination to retain its vaunted J. Aron trading business, even as some rivals shed physical trading operations, comes one day after lawmakers at a U.S. Senate hearing pressed the Federal Reserve to quicken efforts to crack down on what they see as risky business.
Goldman Chief Financial Officer Harvey Schwartz told analysts on its fourth-quarter earnings conference call that Goldman sees "certainly no change in strategy" for its commodities business.
"It is just too important of a business for our clients," he said, reiterating comments last year from both Goldman President Gary Cohn and Chief Executive Officer Lloyd Blankfein, both alumni of J. Aron, the commodities trading operation that Goldman bought over three decades ago.
The comment underscored the difficulty the Fed may face in trying to dislodge some banks from their involvement in trading physical commodities like oil and aluminum, which has deepened over the past decade.
Goldman was an early participant in the physical commodities business through J. Aron. Its commodities activities are statutorily authorized by a clause grandfathered into the 1999 Gramm-Leach-Bliley Act, which has tied the Fed's hands as it seeks to tighten limits on banks' commodities trading in the face of political and public scrutiny.
(Reporting by Anna Louie Sussman in Washington; Editing by Jonathan Leff and Jeffrey Benkoe)