...The report said the scale of these bank holdings "appears to be unprecedented in U.S. history."
Adding to the hubris of the situation, the Wall Street banks' own regulator, the Federal Reserve, gave its blessing to this unprecedented and dangerous encroachment by banking interests into industrial commodity ownership and has effectively looked the other way as the banks moved into industrial commerce activities like owning pipelines and power plants.
For more than a century, Federal law has encouraged the separation of banking and commerce. The role of banks has been seen as providing prudent corporate lending to facilitate the growth of commerce, not to compete with it through unfair advantage by having access to cheap capital from the Federal Reserve's lending programs. Additionally, the mega banks are holding trillions of dollars in FDIC insured deposits; if they experienced a catastrophic commercial accident through a ruptured pipeline, tanker oil spill, or power plant explosion, it could once again put the taxpayer on the hook for a bailout.
The Levin report addresses the element of catastrophic risk, noting:
"While the likelihood of an actual catastrophe remained remote, those activities carried risks that banks normally avoided altogether. Goldman, for example, bought a uranium business that carried the risk of a nuclear incident, as well as open pit coal mines that carried potential risks of methane explosions, mining mishaps, and air and water pollution…Morgan Stanley owned and invested in extensive oil storage and transport facilities and a natural gas pipeline company which, together, carried risks of fire, pipeline ruptures, natural gas explosions, and oil spills.