The Fed’s surprise decision to review the decision to allow Wall Street banks to invest in commodity holdings on Friday sets the agenda for Congressional hearings beginning Tuesday.
I think it’s a slam dunk that the Fed reverses its decision because some parts of the commodity business are simply too risk for banks. Morgan Stanley has large investments in oil tankers, pipelines and powerplants. Imagine a huge industrial accident at one of those and a potential massive liabilty. That’s the kind of thing that could cause a run on the bank.
