A Senate subcommittee chaired by Sen. Sherrod Brown continues to investigate the big bank "hoarding" of aluminum and other commodities, as outlined in a conference call with Brown Wednesday.
Because of a 1999 law and a 2003 Federal Reserve decision, these companies are allowed to participate in commercial activities regarding commodities such as aluminum.
After the Senate Banking Committee's Subcommittee on Financial Institutions and Consumer Protection led by Brown, D-Ohio, presented its hearing Tuesday, Brown held the conference call to further the public awareness of the problem.
One concern of the subcommittee is that in the event of a banking collapse, commercial companies also involved with the bank, including producers who use aluminum, would be affected.
Tim Weiner, global risk manager of commodities and metals for the U.S. beer company MillerCoors, reported at the hearing how his company is affected by bank control of aluminum. The Beer Institute's general counsel, Mary Jane Saunders, summarized his report in the call, saying aluminum the beer company purchased often was held up in bank holding companies' warehouses for up to 18 months.
Brown and Saunders called for attempts to shut down what Brown called "bank hoarding." He said the holding companies "own too many resources for our country to operate."
"At one time, banks were just banks," Brown said.
The hoarding of resources affects 3 billion consumers a year, Brown said, including more than 60 Ohio breweries and about 1,700 brewery jobs.
Brown called for Congress to "crack down on practices" and pass his "Too Big To Fail" legislation.
The legislation would "ensure that financial institutions have adequate capital to protect against losses," according to Brown's website.
Saunders said she was "encouraged" by Brown's work. She also said the London Metal Exchange could address commodity hoarding issue, but if it does not, lawmakers will attempt to pass legislation.
"We are trying to get the whole system to reform itself and operate in a way that's fair," Saunders said. "There's a lack of transparency."
Brown said the subcommittee is trying to get more information from the Federal Reserve and banks.
He said he is unsure whether the law is being manipulated, but he believes the actions of the banks "jeopardizes the stability of the financial system."
They are to hold a hearing in September to "pull information from reluctant banks," Brown said. "None of this is good for financial systems, none of this is good for consumers."