The U.S. Senate Permanent Subcommittee on Investigations is investigating too-big-to-fail banks for fraud in manipulating commodities markets:
One focus for the subcommittee is the management of Detroit-area metal warehouses run by Metro Trade Services International, the largest U.S. warehouse company certified to store aluminum warranted by the London Metal Exchange for use in settling trades. Since Goldman bought Metro in 2010, Metro warehouses have accumulated up to 85 percent of the U.S. LME aluminum storage market.
Since Goldman took over the warehouses, the wait to withdraw LME-warranted metal has increased from about 40 days to more than 600 days, reducing aluminum availability and tripling the regional premium for storage and delivery costs.
The investigation revealed a number of previously unknown details about these deals: that Goldman’s warehouse company paid metal owners to engage in “merry-go-round” deals that shuttled metal from building to building without actually shipping aluminum out of Metro’s system; that the deals were approved by Metro’s board, which consisted entirely of Goldman employees; and that a Metro executive raised concerns internally about the appropriateness of such “queue management.”
Goldman didn’t just store aluminum; it was involved in massive trades of aluminum at the same time its warehouse operations were affecting aluminum availability, storage costs, and prices.
Even more fun than this, if you dig into the long report you can learn that Goldman Sachs is operating a “physical uranium business”, possibly without people qualified to do this:
Goldman’s involvement with physical uranium began with a 2008 proposal by GS Commodities to get into the business of trading physical and financial uranium products and processing rights.688 In 2009, Goldman purchased Nufcor, and expanded its business over the next five years, resulting in Goldman’s buying millions of pounds of uranium, controlling inventories of physical uranium at storage facilities in the United States and Europe, and becoming a long term supplier of physical uranium to nine utilities with nuclear power plants. Because no employees who conducted Nufcor’s business joined Goldman after the sale, Goldman employees ran the business.
This is great Bond villain material. Except Bond would probably be on the banks’ side, as long as they were just trying the rip the world off financially on behalf of the empire, rather than actually blow anything up.