U.S. financial regulators will boost scrutiny of banks' commodities holdings and use their authority to pursue evidence of fraud and manipulation, the heads of two agencies told lawmakers.
"We're a market regulator overseeing the commodity futures, swaps markets and have clear authority to police markets for fraud, manipulation, and other abuses," Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler said at a Senate Banking Committee hearing, where he testified yesterday alongside Securities and Exchange Commission Chairman Mary Jo White. "We will use those authorities appropriately where we see abuses and pursue it."
Gensler and White, who said she would ask the SEC staff to weigh changes to disclosure requirements, responded to questions raised by Senator Sherrod Brown about whether markets and consumers are being harmed under rules that permit lenders including JPMorgan Chase & Co. to own and trade commodities. New York-based JPMorgan, the biggest U.S. bank, agreed yesterday to pay $410 million over claims that it manipulated power markets in 2010 and 2011.
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