The Federal Reserve Board released a proposal that would overhaul the way regulators will supervise foreign banks within the U.S. This approach would be a significant difference from the board's current case-by-case method.
"The shift in supervisory approach has long been expected since the financial crisis revealed to regulators flaws with the current process. Many had been expecting such changes given the failure of Lehman Brothers, which had a substantial broker-dealer subsidiary in the U.K., and severe distress at certain non-U.S. banks with operations in the U.S." writes American Banker's Donna Borak.
The Fed's proposal would require the largest foreign firms to meet similar capital and liquidity requirements that U.S. bank holding companies with more than $50 billion of assets face under the Dodd-Frank Act.
Congress required regulators under Dodd-Frank to reform the way they supervise foreign bank operations with $50 billion or more of globally consolidated assets and a presence in the U.S.
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