Fed proposing rules for foreign banks' US units

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Associated Press

Posted on December 14, 2012 at 2:01 PM

Updated Friday, Dec 14 at 2:01 PM

WASHINGTON (AP) — The Federal Reserve is proposing that large foreign banks keep a bigger financial cushion against unexpected losses for their U.S. affiliates.

The rules proposed Friday are aimed at preventing another financial crisis. They were mandated by the 2010 financial overhaul and would apply to those foreign banks with $50 billion in worldwide assets that operate in the United States.

That means their U.S. affiliates would be subjected to the same capital reserve requirements as U.S. banks. The U.S. operations would have to take the form of a bank holding company, putting them under the Fed's oversight.

The rules wouldn't take effect until July 2015. The Fed estimates that about 107 foreign banks would be affected.

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