WASHINGTON — The Federal Reserve Board took too long to issue a plan to limit banks' physical commodities activities, several Senate Democrats said on Wednesday.

The central bank released a concept proposal this week, laying out how it plans to address the topic and asking for feedback on several outstanding questions. But that was not enough to please some lawmakers who have been calling for action on the topic.

"The Fed's proposal yesterday is a timid step; it was too slow in coming, and there is still too much we don't know about these activities and investments," said Sen. Sherrod Brown, D-Ohio, chairman of the Senate Banking's subcommittee on financial institutions, during a hearing.

Since 2008, Fed officials have been studying the issue closely after firms with significant commodities operations, such as Goldman Sachs (GS) and Morgan Stanley (MS), fell under the central bank's purview.

While those firms are permitted to conduct commodities activities under U.S. law, other financial institutions like JPMorgan Chase (JPM) and Bank of America (BAC) face restrictions on their engagement in such business.

The Fed has been wrestling with how to clarify the law as it becomes increasingly concerned about potential tail risks attached to certain commodities.

In its plan, the Fed cited incidents like the BP Gulf oil spill and last year's Quebec oil train disaster as risks that could ultimately harm financial institutions that own such commodities. Possible remedies include limits on assets and certain restrictions on trading.

"Physical commodities activities can pose unique risks to financial holding companies," said Michael Gibson, the Fed's director of the division of banking supervision and regulation, in prepared testimony. "Indeed, estimating probabilities and costs related to environmental or catastrophic incidents is an imperfect science at best."

But the Fed's actions have not come fast enough for lawmakers such as Sens. Jeff Merkley, D-Ore., and Elizabeth Warren, D-Mass., who said the central bank just woke up to the issue.

Merkley asked Gibson directly if it was a fair characterization that "the Fed was asleep" on physical commodities issues.

Warren agreed, saying the Fed's proposal made little progress in addressing the risks tied to physical commodities activities for deposit-taking institutions.

"Certainly it's a step forward, but a meager one," Warren said.

Gibson played defense as he sought to explain the rationale for the timing of the release of the concept proposal.

"We've had a review under way for a while now," Gibson said during the hearing. "We felt we were at the stage where it was the right time to put out to the public what our concerns were with the risks, what structure of the legal authorities and ask for public input what actions or remedies might be desirable."

The agency has yet to make a decision on how it plans to move forward, but said it will review comments it receives to inform what action it may take. It has not ruled out the possibility of a new regulation.

Fed officials are asking the public to weigh in on a variety of issues by March 15, including the risks that physical commodity activities can pose to banks' soundness, potential conflicts of interest by firms engaging in physical commodity activities and possible risks and benefits of regulators imposing additional capital requirements on those firms.

U.S. financial institutions have already begun trying to exit the physical commodities business given regulatory investigations and potential rule changes. In July, JPMorgan Chase announced it was putting its commodities business up for sale. Morgan Stanley has also reportedly been in talks to sell its commodities trading division.

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