Wonder if you could have paid a little less for a car or a can of beer?
Well, the Detroit News writes that a Senate committee chaired by Sen. Carl Levin says Wall Street bank Goldman Sachs manipulated aluminum stockpiles at Metro Detroit warehouses in a practice that likely has added “billions” to the cost of beer cans and cars.
David Shepardson of the News reports that the Senate Permanent Subcommittee spent two years investigating commodity transactions from Wall Street banks Goldman Sachs & Co., JPMorgan Chase & Co. and Morgan Stanley involving aluminum, uranium, copper, coal mines, and oil and natural gas pipelines.
Shepardson writes:
The committee looked in detail at Goldman Sachs’ acquisition of Allen Park-based Metro International Services LLC in 2010 for $450 million — a company that had about 10 warehouses in Metro Detroit to store hundreds of thousands of tons of aluminum. Major users of aluminum like Coca-Cola, MillerCoors and Novelis say delays caused by long queues to transfer aluminum are causing market distortions, and premiums to store aluminum “are at least double their normal levels.”
In essence, the committee said by using cancellations of major orders and transfers of aluminum, Metro International was able collect more in rent because of long delays in getting the aluminum out of warehouses. In May, the time it took to move metal hit 674 days — up from 100 days in early 2012.
“Since being acquired by Goldman, Metro’s practices have likely added billions of dollars in costs to a wide range of aluminum users, from beer makers to car manufacturers to defense companies that make warships for the Navy,” said the 400-page report released Wednesday. “It is past time for the Federal Reserve and other regulators ... to adopt and enforce needed safeguards on this high-risk physical commodity activity.”
The News reported that Goldman Sachs said its practices at Metro “did not impact the cost that Americans pay for cans of beer.”
