When the Federal Reserve gave JPMorgan (JPM) Chase & Co. approval in 2005 for hands-on involvement in commodity markets, it prohibited the bank from expanding into the storage business because of the risk.
Five years later, JPMorgan bought one of the world’s biggest metal warehouse companies.
While the Fed has never explained why it let that happen, the central bank announced July 19 that it’s reviewing a 2003 precedent that let deposit-taking banks trade physical commodities. Reversing that policy would mark the Fed’s biggest ejection of banks from a market since Congress lifted the Depression-era law against them running securities firms in 1999.
Why? That’s simple — the age-old scam of skimming a fraction of a penny from a transaction is nothing new, and it’s one of the “best” ways to “make money” — steal it a fraction of a cent at a time and “nobody notices.”
The 10 largest banks generated about $6 billion in revenue from commodities, including dealings in physical materials as well as related financial products, according to a Feb. 15 report from analytics company Coalition. Goldman Sachs ranked No. 1, followed by JPMorgan.
They didn’t “generate” anything. They stole it by constraining supply and tampering with the market.
By definition that’s the balance of supply and demand, but when you allow an institution to get away with holding commodities that also creates credit money whenever it likes the two become linked and what looks like a “market activity” is not.
Note what’s said here:
Buyers have to pay premiums over the LME benchmark prices even with a glut of aluminum being produced. Premiums in the U.S. surged to a record 12 cents to 13 cents a pound in June, almost doubling from 6.5 cents in summer 2010, according to the most recent data available from Austin, Texas-based researcher Harbor Intelligence.
It’s not much per can of beer, but on a per-year basis it’s about $3 billion — all of which inevitably winds up being paid for by you, the person who drinks the soda or beer.
Then there’s this:
JPMorgan is nearing an agreement with the Federal Energy Regulatory Commission to settle allegations that the bank manipulated electricity prices in California and the U.S. Midwest, the Wall Street Journal reported. A deal could cost the bank $500 million, the New York Times said, citing people briefed on the matter. JPMorgan’s Marchiony declined to comment.
Well, not quite. JP Morgan. But they’re not alone either; Barclays and Deutsche Bank are also accused of the same thing, and were ordered to pay fines and penalties.
The problem is that you, the consumer of these commodities, in this case energy, do not get a refund for the amount you were overcharged, nor do you get interest on the money stolen from you.
The “fine” goes to the government rather than the parties that were harmed, there is no restitution and there is no criminal prosecution either, even thoughconspiracies to restrain trade and fix prices are per-se criminal acts (according to The Sherman Act.)
Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.
The hell with these fines — I want to see indictments.
When does this stop? Only when you stand and demand that it does, and refuse to produce and give license to the so-called “law enforcement” that existsnot to enforce the law but rather to enable the banks and Banksters, to steal from you day after day while The Fed, which is supposed to regulate this conduct, does exactly nothing about it and Congress refuses to hold either the banks or The Fed to account.