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July 6, 2016

Stopping Taxpayer-backed Too-big-to-fail Banks Goldman Sachs and Morgan Stanley From Physical Commodities is Long Overdue

Wednesday, July, 6 2016
Contact: Nick Jacobs, 202-618-6430 or

Washington, D.C. – Dennis Kelleher, President and CEO of Better Markets, issued this statement following comments by Federal Reserve Governor Daniel Tarullo calling for an end to allowing taxpayer-backed banks such as Goldman Sachs and Morgan Stanley to engage in trading physical commodities.

“When Wall Street’s too-big-to-fail banks like Goldman Sachs and Morgan Stanley lose on their big market bets, they run to U.S. taxpayers for bailouts like they did in 2008.  That’s why their highest risk activities need to be eliminated, limited, and regulated, including their massive multi-billion operations trading physical commodities like oil, aluminum, natural gas, and copper.  For example, taxpayer-backed Goldman Sachs is now a bigger natural gas merchant in North America than Chevron and ExxonMobil. 

“Making matters worse, in addition to trading physical commodities, these banks also engage in the derivatives, futures and cash commodities markets, all while their analysts regularly comment on these markets.  These multiple, simultaneous activities provide unique opportunities for these banks to manipulate the markets and otherwise take advantage of market participants, including commodity purchasers and producers who are trying to hedge genuine risk. 

“For the protection of taxpayers and the markets, these dangerous, high risk and predatory activities must be stopped.  We applaud Federal Reserve Governor Daniel Tarullo’s call today for an end to the loophole that has allowed Goldman Sachs and Morgan Stanley to trade in physical commodities, which would otherwise be barred.  Governor Tarullo’s frank acknowledgement that the exemptions that allowed this trading need to be phased out is a long overdue step in the right direction.  The Fed should begin the rulemaking process to do exactly that without delay.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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