The US Federal Reserve came down hard against banks in the commodity sector. Late last week, the Fed proposed rules that impose a 1,250% capital charge on Goldman Sachs and Morgan Stanley and a 300% capital charge on other banks, including BoA, J.P. Morgan Chase and Wells Fargo. Basically, the Fed frowns on the banks from owning, trading and moving commodities. Already Congress is investigating whether the financial institutions are using their resources to have an undue influence over the physical market. There is no doubt that if successful, they could drive the banks out of the physical commodity sector.
Obviously, any move would undermine liquidity in the markets.
The deadline for comments is Dec. 22.