Lawmakers will hear about the influence big banks can have over the U.S. power markets when they can own plants, supply fuel to those units and trade based on the electricity they generate.
Bloomberg News reports that Thursday’s hearing before a Senate subcommittee is tied to a report, Wall Street Bank Involvement With Physical Commodities, that highlights JPMorgan's entry into the power plant business in 2008 amid the worst financial crisis in the U.S. since the Great Depression.
The report, released yesterday by Democratic Senator Carl Levin of Michigan and Republican Senator John McCain of Arizona, said frustration is building at the Federal Reserve over JPMorgan’s failure to sell three power plants and reduce its control over supply for other units in California.
While JPMorgan had authority to enter into tolling agreements with power plants, it wasn’t allowed to take direct ownership because that would be an improper mixing of banking and commerce, the report showed. Through regulatory squabbles, the bank asserted that it would retain its ownership of the plants. At one point, JPMorgan owned or had rights to the output of 31 power plants nationally and 18 in California.
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