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Senate Panel Probes Fed's Oversight Of Commodity Trading

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Transcript

ARUN RATH, HOST:

Wall Street bankers faced questions before Congress yesterday.

STEVE INSKEEP, HOST:

They're executives from Goldman Sachs, Morgan Stanley and JPMorgan Chase.

RATH: And they defended their banks in front of a Senate investigator.

INSKEEP: Senators contend the banks are buying up big stockpiles of commodities like copper and aluminum. It's allegedly an effort to manipulate prices. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: In a 400-page report issued this week, the committee said major banks have been able to gain an unfair price advantage over suppliers and investors by accumulating huge shares of commodities.

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SENATOR CARL LEVIN: If you like what Wall Street did for the housing market, you'll love what Wall Street's doing for commodities.

ZARROLI: Michigan Senator Carl Levin chairs the committee. He said the Federal Reserve has already warned that banks haven't allocated enough capital to cover losses in extreme scenarios, and taxpayers could pay the price.

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LEVIN: These banks have taken on dramatic new risks, risks that because of the size of these banks fall just not on them, but on the larger financial system and therefore, on our entire economy.

ZARROLI: But bank officials rejected many of the charges yesterday during the first part of a two-day hearing. Goldman officials denied that they had tried to manipulate prices by moving aluminum in and out of a Detroit warehouse. And they said the bank's activities hadn't seriously affected prices because aluminum supplies remain steadily available. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.

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