American regulators intend to ensure that foreign banks operating in the United States have adequate capitalization.
The idea was that the presumably well-capitalized parent back home would stand behind the American operation if it ran into trouble. And the United States could, of course, rely on home countries to both regulate their banks and, if something went badly wrong anyway, provide bailouts.
The rules would require that American subsidiaries of each foreign bank be put together in a holding company that would have to maintain capital, and liquidity, in the United States. In some cases the requirements would be greater than home countries require of the parent institutions.
Read More: http://www.nytimes.com/2013/04/26/business/foreign-banks-in-us-face-greater-restrictions.html?pagewanted=all
I don't think this is such a bad idea, as banks being over-leveraged caused many of our problems here in the past
ReplyDeleteI agree with Eric. Riley seems to think it's a pretty good idea as well.
ReplyDeleteAgain, this is where the world needs a system of global financial regulations and standards. Why hasn't the IMF or World Bank taken up global standards?
ReplyDeleteIn regards to the article it seems as if the United States are letting foreign financial subsides get away with poor corporate budgeting/planning because they can aways fall back on their mother company. As banks borrowed American credit their "poor budgetting" transfered into major problems. Now it looks like the FED is left to clean up their mess rather than their mother company. Bottom line, finance all over the world is a mess.