Courtesy of Pam Martens.
After packing his administration with 1 percenters or people earning a lucrative living off the 1 percenters, President Obama has decided, seemingly out of the blue, to hit the stump on behalf of the plight of the struggling middle class while railing against the income inequality that plagues the U.S.
Could the President’s new focus have anything to do with a new probe of Wall Street practices opened by Carl Levin and the Senate’s Permanent Subcommittee on Investigations? The Subcommittee is delving into the hoarding of physical commodities by the largest firms on Wall Street.
Whether the President is cognizant of the fact or not, the two issues are indelibly linked. Hoarding physical commodities pushes up prices on everything from the cost of food and beverage packaging to the price of a tank of gas to get to work or heating oil to stay warm in the winter. That’s effectively another wealth drainer for the middle class and an impediment to the poor to rise out of poverty.
If Wall Street is further using its superior knowledge of how much physical commodity supply it has removed from the market, or its superior knowledge of how slowly it plans to release supplies to trade for itself (proprietary trading), it’s on a par with exactly what banks have been charged with in the rigging of the London interest rate benchmark known as Libor: harming consumers while enriching themselves.
Levin’s Subcommittee has subpoena power and knows how to use it. That might explain last Friday’s sudden announcement by JPMorgan to exit the physical commodities business, saying it has decided to sell those assets – one business day before getting smacked with a $410 million fine on charges it rigged electricity prices in California and the Midwest.
As Wall Street On Parade reported on July 23, the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, chaired by Senator Sherrod Brown, held a hearing last Tuesday on the matter, titled: “Examining Financial Holding Companies: Should Banks Control Power Plants, Warehouses, and Oil Refineries?”