Federal Reserve Board Chairman Ben Bernanke expressed interest Tuesday in tweaking a new cap on liabilities to bring more parity between foreign and domestic-owned companies.
The Dodd-Frank Act bars acquisitions resulting in a company holding more than 10% of liabilities of all financial companies. But some have suggested the provision could give foreign institutions a leg up on their U.S. counterparts. While foreign-owned companies operating here would be subject to the cap, only their U.S.-based liabilities would count against it, meaning they could potentially compete for certain deals not open to a domestic company.
Sen. Charles Schumer, D-N.Y., discussed those competitive worries at a Banking Committee hearing, meant for Bernanke to report on the economy.
"I fully agree with your concern," Bernanke said, responding to a question from Schumer.
But while Dodd-Frank provides authority to the Fed and the Financial Stability Oversight Council to make certain modifications to the cap, it is unclear how far they can go in interpreting the statute.
Bernanke told Schumer he believed the authority was limited, but the senator said regulators in fact have significant discretion.
"I will look at that, because I do think it's a problem," Bernanke said.
