By Patrick Rucker
WASHINGTON (Reuters) - A swathe of some of America's biggest industrial firms including Boeing
The U.S. Federal Reserve is reexamining a decade-old rule that allowed banks to trade in raw materials, as well as their associated derivative markets, amid criticism that some banks may have too much sway over the supply chain.
If the Fed were to curtail Wall Street's role in that space, major industries would be forced to hold more of their own supplies and otherwise bear greater costs, reads the letter signed by power companies, energy producers, refiners and manufacturing giant like Owens Corning
Wall Street is a partner with industry in spreading the costs and risks of commodities investments, reads the letter, and if the Fed were to drive banks from the market "we likely would be forced to tie-up our own capital in holding physical inventories and the related infrastructure to manage those inventories."
The Fed is also expected to rule soon on whether Goldman Sachs
Officials from the Fed and the Commodity Futures Trading Commission (CFTC) are expected to testify on October 8 before a Senate Banking Committee panel led by Senator Sherrod Brown, a vocal critic of large banks who has pushed regulators to do more to watch for dangers of abuse in the commodities market.
(Reporting by Patrick Rucker; Editing by Leslie Gevirtz)