A two-year Senate investigation into allegations of commodities market manipulation entered its final act on Thursday, when the Permanent Subcommittee on Investigations held a contentious hearing with representatives from Goldman Sachs, JPMorgan, Morgan Stanley, and one of Goldman's subsidiary metal holding companies.

The hearing was part of a broader Senate inquiry into Wall Street’s dealings in commodities such as aluminum, natural gas, coal and uranium. On Wednesday, the subcommittee released a 396-page report arguing that the financial sector’s ownership of physical commodities exposes the economy to “a long list of risks and potentially abusive conduct, including significant financial loss, catastrophic event risks, unfair trading, market manipulation, credit distortions, unfair business competition, and conflicts of interest.”

Outgoing committee chair Sen. Levin, D-Mich., and ranking minority member Sen. John McCain, R-Ariz., used their opening statements to argue that banking and commerce should be strictly separated activities. If banks are involved in the storage and sale of commodities, they argued, they could use their position to distort prices in the financial markets where they also operate, at great expense to consumers.

“If you like what Wall Street did for the housing market, you’ll love what Wall Street’s doing for commodities,” said Levin.

The subcommittee’s report also suggests that banks expose themselves to unacceptable levels of risk by taking possession of hazardous materials. If a natural disaster were to occur involving Goldman’s uranium holdings, for example, it could put a “too big to fail” financial institution in a precarious situation where the government would need to rescue the company at great cost.

“Imagine if BP [British Petroleum] had been a bank,” said McCain, referencing the oil company’s 2010 Deepwater Horizon oil spill. “The losses and liabilities resulting from the spill would have resulted in the bank failing, and another round of taxpayer bailouts.”

The subcommittee’s report included three case studies to illustrate the pitfalls of financial sector involvement in commodity ownership, including one involving Goldman Sachs and one of its subsidiaries, the metal holding company Metro International Trade Services LLC.

During Thursday’s hearing, Goldman Commodities Principle Investment Group head Jacques Gabillon and Metro International CEO Chris Wibbelman were called to account regarding allegations that Metro International drove up the price of aluminum to the profit of its parent company’s commodities trading arm. Sen. Levin grilled Wibbelman at length over the course of the three-hour interview.

At times, Levin appeared to lose his patience with the witness, sometimes asking yes or no questions several times in a row before giving up.

“I’m not trying to be—” said Wibbelman after again not replying with a yes or no.

“Yeah. You are trying to be,” replied Sen. Levin.

Metro International allegedly drove up the price of aluminum in part through “merry-go-round” transactions that shuffled the commodity between various warehouses, lengthening the exit queue for loading aluminum out of storage. Following Wibbelman and Gabillon’s testimony, Sen. McCain asked an expert witness from the aluminum industry whether such a practice could be said to “border on a manipulation of the market.”

“It’s an extremely imaginative approach to maintaining a profitable warehouse company, to not allow stuff to leave,” replied Nick Madden, senior vice president and chief supply chain officer for the aluminum company Novelis Inc.

Later in the afternoon, representatives from Goldman Sachs, Morgan Stanley and JPMorgan gave testimony related to the bigger picture of their respective banks' physical commodity holdings. Morgan Stanley's Simon Greenshields and JPMorgan's John Anderson emphasized that their banks were taking a step away from the physical commodities sector.

"It is important to state at the outside that today, much of JPMorgan's physical commodities assets and business have been sold," said Anderson, who added that the bank would focus more on "its financial derivatives business" in the future.

Goldman Sachs appeared to be beating less of a retreat from the physical commodities business, although Gregory Agran, the bank's co-head of Commodities Trading, told the subcommittee that his employer had no immediate plans to purchase more physical assets.

"Each one of you is pulling back somewhat," said Levin in his closing statement. "And I'm glad at least two of the three of you are pulling back significantly."

The hearing will continue on Friday, when two more expert witnesses discuss regulation of the commodities market. The subcommittee will also hear testimony from a member of the Federal Reserve’s Board of Governors and the acting director of the Federal Energy Regulatory Commission’s Office of Enforcement.

A report from Goldman Sachs, released on Wednesday, disputed some of the findings of the Senate subcommittee. In the report, the bank contended that aluminum prices “have fallen substantially since 2008,” and that the financial sector’s involvement in the physical commodities business has advantages for the economy at large.

“Some have suggested that financial intermediation increases the prices and volatility of commodities. This is not supported by any empirical evidence,” according to the report. “In fact, the evidence points to lower bid-offer spreads and less volatility in markets characterized by greater financial institution participation.”