A U.S. Senate banking committee begins looking Tuesday at whether big American banks can both trade commodities and hold physical assets related to shipping oil and metals.

At the same time, the U.S. commodities market regulator has announced a possible investigation of metals warehousing businesses owned by big banks, such as Goldman Sachs, Morgan Stanley and JPMorgan Chase.

The scrutiny follows years of complaints about inflated commodities prices, including oil prices and aluminum prices.

'When Wall Street banks control the supply of both commodities and financial products, there’s a potential for anti-competitive behavior and manipulation'—U.S. Senator Sherrod Brown

"When Wall Street banks control the supply of both commodities and financial products, there’s a potential for anti-competitive behavior and manipulation," U.S. Senator Sherrod Brown said ahead of the Senate hearing.

The Senate is responding to complaints from aluminum consumers such as brewer MillerCoors that say banks are boosting prices through their control of international metals warehouses.

Large industrial consumers of aluminum say because banks control they London Metal Exchange warehouses, they can delay delivery of metal to customers, boosting its price and earning big profits on rent for storing it.

In the past decade, the big Wall Street players have become full-scale merchant commodity houses, owning fleets of oil tankers, buying up refineries, and even operating regional electricity plants, all investments that other banks are prohibited from owning.

Goldman and Morgan Stanley have argued that their commodities activities were "grandfathered" under a 1999 law, citing an amendment allowing non-regulated banks to carry on activities they engaged in prior to 1997.

5-year grace period after bailout

After being bailed out in 2008, the big Wall Street firms became bank holding companies and the Federal Reserve gave them a five-year grace period to reconsider owning such assets. That five-year period is up in September.

An announcement Friday seemed to indicate the Fed is leaning toward a harder line on what the "too big to fail" banks may own.

"The Federal Reserve regularly monitors the commodity activities of supervised firms and is reviewing the 2003 determination that certain commodity activities are complementary to financial activities and thus permissible for bank holding companies," the Federal Reserve said in a statement.

With record fines levied against Barclays over allegations that the U.K. bank manipulated U.S. power markets and JPMorgan also accused of electricity price-fixing, there is pressure on regulators to restrict bank activities.

Senate to review expansion into commercial activities

The Senate committee will look into whether banks should be allowed to control power plants, warehouses and oil refineries.

"Reviewing Wall Street's expansion into commercial activities is essential," Senator Brown told Reuters. "Congress, regulators, and the public need to understand what has happened in the 14 years since the financial floodgates were opened, and reconsider what we want banks to do."

Just last week, banks received an order from the U.S. Commodity Futures Trading Commission ordering them to preserve emails, documents and instant messages from the past three years. That may be a harbinger of a probe of their commodities trading activities to determine whether there is price-fixing going on.

Since 2010, commodities trading in metals and oil has become dominated by banks including Goldman Sachs, JPMorgan Chase & Co and global merchant traders like Glencore Xstrata Plc and Trafigura AG.