Lawmakers pressed the Federal Reserve yesterday to act more forcefully, and quickly, to limit banks’ involvement in the commodities business, which has been blamed for inflating prices on everyday items like electricity and canned beverages, the New York Times reported today. For months, Congress has been evaluating complaints that the huge commodities holdings of investment banks like Goldman Sachs and Morgan Stanley pose a risk to the financial system. Businesses and consumer groups have also expressed concern that the banks’ financial heft gives them an unfair advantage over other competitors as well as the ability to manipulate prices for essentials like energy, cotton and food. On Tuesday, the Fed said it was considering some new rules and issued a request for public comment. In part, the Fed wants to determine whether the financial system could be hurt if banks incurred large losses in the volatile commodities markets.
