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NYT: The House Edge

Authors: David Kocieniewski, and Gretchen Morgenson
January 6, 2014


Articles in this series examine the challenges posed by Wall Street's influence over markets and the prices consumers pay.

MOUNT CLEMENS, Mich. — Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars.

The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers' aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.

This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country.

Part I: "A Shuffle of Aluminum, but to Banks, Pure Gold"

Part II: "Wall St. Exploits Ethanol Credits, and Prices Spike"

Part III: "Off Limits, but Blessed by the Fed"

Part IV: "Academics Who Defend Wall St. Reap Reward"

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