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Wall Street's Commodities War
02 Mar 2012 EST - CNBC.com
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Reuters is reporting that Wall Street is desperately trying to hold on to its commodities warehousing business:

Wall Street's biggest banks are locked in an increasingly frantic struggle with the Federal Reserve over the right to retain the jewels of their commodity trading empires: warehouses, storage tanks and other hard assets worth billions of dollars.

While the battle over proprietary trading and new derivatives regulations has taken place largely in public view since the 2008 financial crisis, the fight by JPMorgan Chase, Morgan Stanley and Goldman Sachs to retain or expand their prized physical commodity operations — most acquired in only the past six years — has remained hidden.

The debate is nearing an inflection point: Within 18 months, the Fed will likely either allow banks more freedom to invest in the physical commodity world than ever; or force them to sell off the assets that many banks are counting on to buttress their trading books, at a time when they are already vulnerable because of intensifying competition and new trading curbs.

The banks here are Goldman Sachs , Morgan Stanley , and JPMorgan Chase . For the banks, the benefits of keeping these businesses are obvious: They contribute mightily to the bottom line.

It also gives them a big advantage when it comes to trading. From Reuters:

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