Goldman hits back over its ownership of physical commodities Forcing banks to sell their physical commodities businesses to non-banks could increase risks of market manipulation, Goldman Sachs executives argued as they disputed a Senate report's claims that they manipulated movements of aluminium to increase prices. The executives testified on Thursday before the Senate permanent subcommittee on investigations, which this week said Goldman Sachs, Morgan Stanley and JPMorgan Chase had exposed themselves to environmental disasters and possible market manipulation by owning aluminium warehouses, oil storage facilities and power plants. The first part of the hearing focused on Goldman's unit, Detroit-based Metro International Trade Services, which operates a network of metals warehouses. The subcommittee said Metro purposely moved aluminium from one warehouse to another in what critics call "merry-go-round" deals, which caused long queues to take delivery of aluminium and raised prices for consumers and companies. In testy exchanges, subcommittee chairman Carl Levin pressed the Goldman executives about how Metro gave incentives to aluminium owners, including Deutsche Bank, to use its warehouses and cancel warrants. The cancellation would cause longer queues, which then increased the price of aluminium, Mr Levin said. "I want to get a straight answer from you if I can," Mr Levin said to Metro chief executive Christopher Wibbelman. You are telling us under oath that you didn't care whether they cancelled or not? Mr Levin also asked Mr Wibbelman about Goldman cancelling warrants it owned in 2012 and whether that lengthened the queue. "Any cancellation lengthened the queue," Mr Wibbelman said. Mr Levin then suggested that Mr Wibbelman revise his opening statement, which said Goldman was not responsible for causing longer queues. The senator repeatedly said that Metro did not have long queues and did not engage in merry-go-round deals before Goldman bought it. Bank executives said the long queues were due to market conditions, not because of Goldman's ownership. Mr Wibbelman said Metro moved aluminium from one warehouse to another under the direction of its customers. He added that aluminium owners were not forced to move the metal or to cancel warrants, and the owners had the option not to live up to their contracts with Metro. Goldman has also contended that Metro's operations did not have an impact on aluminium prices, and the bank has strict conflict of interest policies that separate its various business units. Metro, which was acquired by Goldman in 2010, was put up for sale a year ago. Jacques Gabillon, a Goldman commodities executive, said it was possible Metro could soon have a foreign owner because the unit had drawn interest from possible buyers in Europe, Russia and China. Republican senator Rob Portman questioned whether a new owner, which could be a less regulated trading company, would be under the rules of the London Metals Exchange, of which Metro is a member. Non-LME warehouses operate under fewer regulations. "They won't have all the banking restrictions," said Mr Wibbelman, who added that having a non-bank owner would decrease transparency because they would not be under the same regulation as Goldman. He said that could increase the potential for market manipulation or other risks. Executives of Morgan Stanley and JPMorgan, along with another Goldman official, are also scheduled to testify on Thursday.