Last week, I described several so-far wholly unsuccessful arguments big banks have mustered to beat back proposals they don’t like: it’s 1) bad for global competition and/or 2) it will reduce credit availability. To these, I’ll now add two more flops. The first is, “We get to do it because we’ve always done it.” This was one of the push-backs offered Tuesday when questions arose about physical-commodity operations like aluminum warehousing. But, as one witness on the other side memorably put it, just because U.S. banks once legally and profitably financed the slave trade doesn’t mean they now get to do the same for human trafficking. The second non-starter that got remarkably little sympathy was, “We get to keep doing it because it’s never resulted in systemic risk.” Not so far is, of course, the obvious comeback. Are we just talking to ourselves?

In the case of physical commodities, we have one of the most awkward cases of impromptu regulatory policy. The lone industry-friendly witness at the hearing cited trading in grain and salt as examples of bank operations in this sector going back to Mesopotamia, but one need not reach back to the pre-Biblical era to come up with germane examples. To this day, national banks can trade in gold and certain other precious metals. This is a relic of the Gold Standard, but it’s still in law and, as a result, a tidy business for some banks.

A far bigger business does not reach back to the remote and distant past. The most significant big-bank commodity ventures arose essentially by accident during the financial crisis. Under acute stress, the Fed looked the other way as it forged the shot-gun wedding between JPMorgan and Bear Stearns and the last-minute transformation of Morgan Stanley and Goldman Sachs into bank holding companies. At the height of the “market knows best” moment before the crash, the FRB in 2003 had given Citigroup broad scope to get into physical commodities. With this as precedent – and, perhaps, memories of Mesopotamia in mind – the Fed didn’t say no to any of the giant transactions that redefined banking in 2007 and 2008.

The only caveat in any of these deals is the five-year window in which BHCs must divest impermissible activities after merging with someone doing something it can’t. The FRB has presumably let this deadline pass without any structural realignment at JPM, while Morgan Stanley recently told investors it did not expect its looming September deadline to force any change, including with regard to the fleets of oil tankers it owns. To be sure, JPM and Goldman have been restructuring their metal-warehousing operation, but this may be more due to business dynamics than regulatory demand.

As this brief history lesson suggests, there was no coherent policy review of whether physical-commodity activities in all sectors and fashions is appropriately conducted in concert with gathering insured deposits and access to the discount window. Awakened by two pending enforcement actions related to electricity trading, investigative journalism in the New York Times and, now, the Senate Banking hearing, the Fed last Friday said it’s re-examining its prior, laissez-faire approach to all of these operations.

At the least, I expect this re-examination to result in a proposed new framework for BHCs forcing far more separation, concentration limits, higher capital and similar constraints on commodity operations. At the most, the Fed will force big banks out of the business, using if nothing else is at hand the Dodd-Frank powers it’s been granted to get big banks out of anything the Fed decides it doesn’t like.

Is there a defense to this demand? Yes, although it may be too late. First, the industry needs a clear-eyed review of the real risks in what’s always been a high-flying, way-volatile business. To make some or all of it appropriate in a regulated institution with unique benefits and still unresolved TBTF status requires up-front improvements, especially with regard to firewalls that go beyond the letter of the law to ensure real separation from an array of risk, reputational included.

Second, the industry needs to consider whether its activities indeed support commodity-market efficiency, availability and pricing in ways that do something for someone other than itself. Last-minute arguments to this effect were offered to defend the aluminum warehouses, but they fell flat when a beer-industry witness described his travails and the cost this adds to a Coors. Are there customers who like banks in this sector? For cause? Are there data to support the benefits big banks say they bring?

These aren’t unreasonable questions outsiders will ask. If banks can’t answer them substantively, accurately and quickly, they’ll have only themselves to blame if physical-commodity operations follow slave-trade finance into an inglorious past.