Bob Goodlatte, who chairs the House Judiciary Committee, was
speaking as a member of the House Committee on Agriculture, which
adopted a bill to rewrite the rules governing the Commodity Futures
"The CFTC acknowledges that they have the authority to regulate and
investigate concerns about the aluminum supply," said Goodlatte, a
"End-users are concerned that the CFTC has been slow in taking
action and looking into their concerns."
Complaints about high prices from brewers and other aluminum users
last year sparked frenzied scrutiny from politicians and regulators
in the United States and elsewhere on the role of big banks in
Much of their wrath focused on vexing logjams within the network of
LME warehouses — many owned by big banks and traders — something
critics say is a deliberate tactic by the operators to charge
storage fees over many months.
The LME — owned by Hong Kong Exchanges and Clearing Ltd — had
started a consultation to reform the process, but the London High
court last month put an end to that, condemning the process as
"unfair and unlawful".
The Department of Justice and CFTC are looking into the issue which
has been under political, regulatory and legal scrutiny since the
middle of last year.
Senator Sherrod Brown, an Ohio Democrat who has lead the charge in
Congress against banks' involvement in the physical commodity
business, urged the CFTC to take an aggressive stance on the issue
earlier this year.
Goodlatte chairs the House Judiciary Committee, which has also
looked into the matter, according to a Committee aide, and has met
with representatives of the aluminum industry. The lawmakers' panel,
which oversees the Justice Department, did not however at this
moment plan to hold a hearing.
[to top of second column]
Goodlatte's remarks came at a meeting at which the House Committee
on Agriculture adopted a bill to adjust the CFTC's mandate and
several of its rules, a process known as reauthorization that
roughly takes place every five years.
However, he withdrew an amendment to the bill that would have
required the CFTC to report in a year's time to account for its
oversight of aluminum markets. In return, the panel vouched to keep
a close eye on the issue.
The bill now needs to go to the House floor, but few policy watchers
expect it to become law because President Barack Obama's
administration opposes the changes. That means the Democrat-led
Senate is unlikely to pass it.
The LME is regulated by the UK's Financial Conduct Authority (FCA),
but the CFTC holds sway over its U.S. business.
(Reporting by Douwe Miedema; additional reporting by Aruna
Viswanatha in Washington and Josephine Mason in New York; editing by
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.