Wall Street is challenging a Federal Reserve rule that would make US banks hold more capital against commodities investments, claiming its impact is excessive. Goldman Sachs is the only big bank with a large exposure to the sector, and this rule may force banks to withdraw from commodities completely as the capital charges hit returns. The Commodity Futures Trading Commission (CFTC) has proposed rules for how financial institutions should manage their commodity investments. Big banks have been using similar arguments in lobbying to roll back existing rules, including the Volcker rule limiting risky, speculative trading and the Durbin rule, which caps the fees they can charge retailers for processing debit card transactions. Supporters say it would also help to mitigate commodity price fluctuations and social conflicts arising from commodity-related activities.
Wall Street is challenging a Federal Reserve rule that would make US banks hold more capital against commodities investments, claiming its impact is excessive. Goldman Sachs is the only big bank with a large exposure to the sector, and this rule may force banks to withdraw from commodities completely as the capital charges hit returns. The Commodity Futures Trading Commission (CFTC) has proposed rules for how financial institutions should manage their commodity investments. Supporters say it would also help to mitigate commodity price fluctuations and social conflicts arising from commodity-related activities.