The Federal Reserve may consider limits on bank ownership andtrading of physical commodities out of concern that an event suchas 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 ata Senate hearing on her nomination to become chairman of thecentral bank. “We want to make sure that these are conducted in asafe and sound manner, and we may be involved in additionalrulemaking as we complete this review.”

Banks trade derivatives related to commodities, from oil to cornto gold. To support that business, they often accept delivery ofthose assets to settle trades, and even store the materials. Manybanks have moved beyond trading to owning physical operations suchas shipping companies and power plants.