Tightening the screws: Fed to tighten rules for banks in US
Federal Reserve moved to place large foreign banks under the same regulatory regime it applies to domestic banks.
Afp
December 16, 2012
Less than a minute read
WASHINGTON:
The Federal Reserve moved Friday to place large foreign banks under the same regulatory regime it applies to domestic banks, aiming to reduce the risk of a foreign bank collapse hurting the US financial system. Adding fresh local regulation to the banks on top of the Basel III capital rules, the largest foreign banks will have to set up US holding companies for their US operations, have limits set on their credit exposure, and meet local capital and liquidity rules for their US operations. They will also be subject to Fed stress tests on their US operations, to make sure they have enough local buffer to withstand external shocks, whether from inside the United States or outside. The new rules, which if finalised will come into effect on July 1, 2015, follow the tighter regimes set for the largest US banks in the wake of the Wall Street financial crisis of 2008.
Published in The Express Tribune, December 16th, 2012.
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