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3/3/14 - The New U.S. Framework for Supervision of Foreign Banks

The Federal Reserve Board on Feb. 18 approved a final rule implementing a key pillar of the Dodd-Frank Act: enhanced prudential standards for large banking organizations and foreign banking organizations. The final rule represents a significant departure from the Federal Reserve’s previous regulation of foreign banking companies with U.S. operations, and creates a comprehensive framework of standards for capital and leverage, stress testing, liquidity, and risk management.

While many FBOs had anticipated the coming changes by moving toward integrated U.S.-wide risk and control frameworks, the final rule is likely to accelerate these efforts. Please click below to read a Sightlines InFocus by Susan Krause Bell and Jonathan Gould that explains key elements of the new rule, as well as the new rule’s likely implications for FBOs.