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 Levin's investigators have met with representatives from Goldman
Sachs <GS.N> and JPMorgan Chase <JPM.N> in recent weeks, according
to sources familiar with the matter.
Executives from those companies may appear at a hearing as early as
September, during which Levin's Permanent Subcommittee on
Investigations would present the findings of the probe, the sources
said.
Spokesmen for Goldman and JPMorgan declined to comment.
Specifically, Senate investigators have explored whether Wall Street
has abused its commodities holdings at the expense of clients,
consumers, the environment or the health of the market, according to
the people familiar with the probe.
The probe's findings and the possible hearing will add to the
scrutiny Wall Street firms have already faced from the Federal
Reserve and from other lawmakers over whether it is appropriate for
banks to maintain vast holdings in metals warehouses and other
physical commodities businesses.
Companies including MillerCoors LLC and The Coca-Cola Co <KO.N>, for
example, have accused warehouses and their owners of distorting
supplies, inflating the prices of aluminum, and costing consumers
billions of extra dollars annually.
Wall Street has found it lucrative to have a hand in both the
trading and delivery of commodities but some investment banks have
retreated from parts of the businesses as they have become the focus
of lawsuits, regulatory scrutiny and public outrage.
JPMorgan has sold its physical trading business and Goldman is
selling its metals storage company but the banks have not dropped
all such holdings.
FINAL TARGETS
Banks' commodities businesses is one of the final targets for Levin,
who is retiring at the end of this year after serving on the
powerful investigations panel for around 15 years.
Levin said in an interview on Thursday that he expects to conclude
his work on Wall Street and commodity investments before he departs.
"We are looking at the physical commodities issue. There may be one
other (issue to investigate), but I don't want to say what it might
be," said Levin, a Michigan Democrat. He declined to elaborate.
Levin's panel began examining the commodities market in late 2012,
after several months of growing complaints from metals users and
following a Reuters story that highlighted a behind-the-scenes
struggle between the banks and the Fed over commodity trading.
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A front-page New York Times story and a Senate Banking subcommittee
hearing in mid-2013 added to the pressure, and the Fed said early
this year that it was likely to push forward with new measures to
limit banks' involvement in the raw materials supply chain.
BEYOND BANKS' STABILITY
While the Fed has examined whether Wall Street's broad ownership of
mines, wells or other physical assets could present a risk to a
bank's solvency, Levin said his questions go deeper.
"We are looking at many aspects of physical commodities... It is
broader than safety and soundness," Levin said, using a regulatory
term for bank stability.
The Senate returns from summer recess in early September and sources
said a hearing on the commodity issue is likely in the second or
third week of that month.
Levin took control of the oversight panel for the second time in
2007 and has often excoriated Wall Street executives about their
business tactics, use of tax loopholes and other perceived abuses.
Over four, politically-charged hearings in April 2010, Levin
summoned regulators and Wall Street executives to answer for their
behavior during the global financial crisis.
In March 2013, he grilled executives from JPMorgan about trades that
led to $6.2 billion losses known as the "London whale" trades.
Such hearings can shine an important spotlight on regulatory
failings and wrongdoing, Levin said.
(Additional reporting by Douwe Miedema David Lawder in Washington;
Editing by Karey Van Hall and Frances Kerry)
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