Sen. Jeff Merkley (D-Ore.) echoed his concerns.
“If you’re simultaneously allowed to bet on the price and you’re allowed to have your thumb on the scale of the price, it’s a huge conflict of interest,” he said.
Sen. Debbie Stabenow (D-Mich.) sent CFTC Chairman Gary Gensler a letter on Tuesday urging he look into banks’ involvement in the aluminum market in particular, about which concerns have been raised.
The CFTC has told major Wall Street banks to preserve emails and documents that could be used as part of a future investigation into their use of warehouses to store metals, though Gensler declined to say what actions would be next.
“I think it would be best not to prejudge any matter that we may or may not be looking at,” he said, noting that the agency was capable of policing the market.
“We will do similarly if we see it, whether it’s coin or wheat, whether it’s metals, whether it’s energy products,” he said. "I do think we have the strong legal tools to do what we’re supposed to do.”
SEC Chairwoman Mary Jo White said on Tuesday that she had become aware of the issue “fairly recently,” but had since directed staff to look into it.
She said that issues around disclosure might be ripe for the SEC to investigate.
Democrats have been pushing the issue more strongly, but they are not alone.
“Clearly an issue has been identified that needs to be reviewed carefully,” said Sen. Mike Crapo (R-Idaho) after the hearing ended.
Last week, a Banking subcommittee Brown chairs held a hearing examining whether or not those banks in the commodities market are doing anything illegal.
On Tuesday, JPMorgan agreed to pay $410 million to settle allegations from the Federal Energy Regulatory Commission that it manipulated power markets in California and the Midwest from 2010 to 2012.