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United States Senate
 
 PERMANENT SUBCOMMITTEE ON INVESTIGATIONS 
Committee on Homeland Security and Governmental Affairs
Carl Levin, Chairman John McCain, Ranking Minority Member 
WALL STREET BANK INVOLVEMENT WITHPHYSICAL COMMODITIES
MAJORITY AND MINORITYSTAFF REPORT
PERMANENT SUBCOMMITTEEON INVESTIGATIONSUNITED STATES SENATE
RELEASED IN CONJUNCTION WITH THEPERMANENT SUBCOMMITTEE ON INVESTIGATIONSNOVEMBER 20 AND 21, 2014 HEARING
 
SENATOR CARL LEVINChairmanSENATOR JOHN McCAINRanking Minority MemberPERMANENT SUBCOMMITTEE ON INVESTIGATIONS
ELISE J. BEAN
Staff Director and Chief Counsel
TYLER GELLASCH
Senior Counsel
JOSEPH M. BRYAN
Professional Staff Member Armed Services Committee
DAVID KATZ
Senior Counsel
AHMAD SARSOUR 
Detailee
ANGELA MESSENGER 
Detailee
JOEL CHURCHES
Detailee
MARY D. ROBERTSON
Chief Clerk 
ADAM HENDERSON
Professional Staff Member 
HENRY J. KERNER 
Staff Director and Chief Counsel to the Minority
MICHAEL LUEPTOW
Counsel to the Minority
ELISE MULLEN
Research Assistant to the Minority
TOM McDONALD
Law Clerk 
TIFFANY EISENBISE
Law Clerk 
CHRISTINA BORTZ
Law Clerk to the Minority
ANDREW BROWN
Law Clerk to the Minority
DANICA HAMES
Law Clerk to the Minority
JENNIFER JUNGER 
Law Clerk to the Minority
TIFFANY GREAVES
Law Clerk 
KYLE BROSNAN
Law Clerk to the Minority
CHAPIN GREGOR 
Law Clerk to the Minority
PATRICK HARTOBEY
Law Clerk to the Minority
FERDINAND KRAMER 
Law Clerk to the Minority
11/18/14
 Permanent Subcommittee on Investigations
199 Russell Senate Office Building – Washington, D.C. 20510 Majority: 202/224-9505 – Minority: 202/224-3721Web Address: http://www.hsgac.senate.gov/subcommittees/investigations
 
WALL STREET BANK INVOLVEMENT WITHPHYSICAL COMMODITIESTABLE OF CONTENTS
I.EXECUTIVE SUMMARY
................................................. 1
A.Subcommittee Investigation
. . . ........................................... 2
B.Investigation
 
Overview.
. ................................................ 2
C.Findings of Fact and Recommendations
. . . ................................. 9 Findings of Fact:(1)Engaging in Risky Activities. . ....................................... 9(2)Mixing Banking and Commerce. . . . ................................... 9(3)Affecting Prices. . . . ................................................ 9(4)Gaining Trading Advantages . . ....................................... 10(5)Incurring New Bank Risks. . . ........................................ 10(6)Incurring New Systemic Risk . . ....................................... 10(7)Using Ineffective Size Limits . . ....................................... 10. (8)Lacking Key Information. . . .......................................... 10 Recommendations:(1)Reaffirm Separation of Banking and Commerce. . . ........................ 10 (2)Clarify Size Limits. . . ............................................... 10 (3)Strengthen Disclosures. . . ............................................ 11 (4)Narrow Scope of Complementary Activity . . ............................. 11 (5)Clarify Scope of Grandfathering Clause. . . .............................. 11 (6)Narrow Scope of Merchant Banking Authority. . . ......................... 11 (7)Establish Capital and Insurance Minimums. . . ............................ 11 (8)Prevent Unfair Trading. . . ........................................... 11 (9)Utilize Section 620 Study. . . ......................................... 11 (10)Reclassify Commodity-Backed ETFs. . . ................................ 12 (11)Study Misuse of Physical Commodities to Manipulate Prices . . .............. 12
II.BACKGROUND
......................................................... 13
A.Short History of Banking Involvement in Physical Commodities
............... 13(1)Historical Limits on Bank Activities................................... 13 (2)U.S. Banks and Commodities ........................................ 19
B.Risks Associated with Bank Involvement in Physical Commodities
............. 34
C.Role of Regulators
..................................................... 42(1)Federal Reserve Board.............................................. 43(2)Other Federal Bank Regulators........................................ 44(3)Dodd-Frank Provisions.............................................. 47(4)Other Agencies.................................................... 48i

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