Review of Bank Commodity Activity Could Bring Limits

In a Senate hearing today, Janet Yellen indicated the Fed may impose new rules on banks that own and trade in physical commodities

The Federal Reserve may consider limits on bank ownership and trading of physical commodities out of concern that an event such as an oil spill could undermine financial stability.

“We are involved in a very comprehensive review” of banks’ commodities activity, Fed Vice Chairman Janet Yellen said today at a Senate hearing on her nomination to become chairman of the central bank. “We want to make sure that these are conducted in a safe and sound manner, and we may be involved in additional rulemaking as we complete this review.”

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