For banks other than those eligible for grandfathering, they’ll face 300 percent risk weighting for physical commodities -- meaning they’d have to maintain triple the capital a bank needs to back up construction loans or corporate debt, for instance. The agency said its aiming for a “level of capitalization for such activities that is roughly comparable to that of nonbank commodities trading firms.”

Meanwhile, banks that were once big players in physical commodities have shied away. Morgan Stanley sold off its oil business last year and backed away from industrial metals trading, and JPMorgan shed a big part of its physical commodities business in 2014. While Goldman Sachs dumped a coal-mining operation in 2015, Chief Executive Officer Lloyd Blankfein has maintained that commodities trading is a “core” part of his firm’s business.

Last year, Fed Governor Daniel Tarullo argued in congressional testimony that a few big banks’ ownership of raw materials appeared to break through the wall between banking and commerce in a way that made the financial firms vulnerable to unique liabilities -- such as from a catastrophic oil spill. His agency reiterated Friday that the “possibility of an environmental accident due to these activities presents significant risks to the firms.”

Merchant Banking

Two weeks ago, the Fed and other banking regulators released a report that made several recommendations about restricting the industry’s dabbling in commodities beyond their usual trading activity. The Fed’s section called for Congress to ban merchant banking, the practice of investing in companies instead of lending them money, in which Goldman Sachs has been a leader.

Merchant banking and commodities activities are cousins, because they both involve banks chasing returns outside of their customary businesses. But unlike the Fed’s new proposal on commodities, the merchant banking restriction would require intervention from lawmakers -- a challenge in a politically-divided Congress that has passed only a few significant bills affecting the financial system in recent years.

Friday’s proposed rule -- which like an earlier proposal from the Office of the Comptroller of the Currency will limit banks’ holdings of copper by no longer considering it a precious metal -- will be open for public comments for 90 days.

The leading banks have been responding to mounting pressure for years.

Goldman Sachs

In 2014, Goldman Sachs sold metals warehousing unit Metro International Trade Services LLC that had become a lightning rod for criticism. Last year, the firm sold a port in Colombia and two coal mines in the Latin American nation, with the mine sales marking the end of operations at Goldman’s commodities principal investments group, which over 35 years invested in everything from mines to oil refineries, power plants and metals warehouses.