Saturday, July 27, 2013
Now that everybody is onto the scam
JP Morgan Chase has decided to bail out of the physical commodities business. Well before any new regulations make them do so.
New York-based JPMorgan, the largest U.S. bank, said yesterday that it’s “pursuing strategic alternatives,” including the sale or spinoff of its commodities business, after an internal review. The statement came three days after a congressional hearing investigated whether deposit-taking banks should be allowed to trade raw materials such as oil and industrial metals.This is a start, but we are still waiting for the big pirates, Goldmine Sachs and Morgan Stanley to get out or give up taking federally insured deposits. Then commodities can won't be so exciting and expensive.
JPMorgan owns and trades financial and physical commodities including crude oil, natural gas and power, and describes itself as “one of the world’s leading energy market makers.” The bank may be the first to exit physical commodities, though others may follow if regulations are changed, as suggested by Senator Sherrod Brown, an Ohio Democrat whose subcommittee of the Senate Banking Committee held the July 23 hearing.
“It looks like they want to get ahead of what appears to be a new wave of regulation that will limit the activities of the banks in the commodities sphere,” said John Kilduff, a partner at Again Capital LLC, a New York hedge fund that focuses on energy.
Regulators need to take a “long, hard look at the practice of banks holding physical commodities,” Brown said in a statement before the hearing. JPMorgan’s decision to consider selling or spinning off its commodities business is “good news for consumers and taxpayers,” he said in an e-mail yesterday.
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