Banking on Commodities

Office of the Comptroller of the Currency is out with a new report the only one that identifies the commodity betting activities of banks.

According to reporting by Reuters:
                

"U.S. bank holding companies including Goldman Sachs (GS.N) and JP Morgan (JPM.N) raked in $2.7 billion incommodity and other trading revenue in the first quarter, the highest in at least two years, data showed.

Revenues surged 67 percent versus the fourth quarter of 2010 and rose by a third from the first quarter a year ago, according to a quarterly derivatives report by the Office of the Comptroller of the Currency (OCC). The total was the highest since the OCC, an arm of the U.S. Treasury that supervises all national banks, began breaking out the holding company data in early 2009.

The report is the only public gauge of the earnings of commodity trading operations among the big bank holding firms, which don't otherwise report a detailed breakdown by type of asset. The data covered a quarter in which several of the biggest banks stepped up their risk-taking in raw material markets."

What fractional amount do you think was actually done as actual hedging for clients?  The only certainty here is that you and I will be picking up the tab at the pump or on the shelf.