The banks are now locked in deep debate with the Fed, multiple sources involved in the discussions told Reuters. 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. 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 JPM.N, Morgan Stanley MS.N and Goldman Sachs GS.N to retain or expand their prized physical commodity operations - most acquired in only the past six years - has remained hidden.
will report its third quarter earnings on Wednesday. A sign is seen outside the JPMorgan office in Los Angeles, California, October 12, 2010.
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