US Fed plans to tighten the leash on foreign banks
The United States has traditionally relied on foreign supervisors to watch overseas banks, allowing them to hold less capital than their domestic counterparts.
The 2010 Dodd-Frank broad overhaul of the U.S. Financial landscape put an end to that policy, after the Fed was forced to extend hundreds of billions of dollars in emergency loans to overseas banks in the financial crisis.
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Deutsche Bank, Germany's flagship lender, is among those to be heavily affected after it overhauled its U.S. subsidiary Taunus to avoid having to inject billions of dollars of capital to meet Dodd-Frank financial reforms.
This year, Deutsche gave up bank holding company status for Taunus Corp, which has about $90 billion of risk-weighted assets, but will now have to put the unit back into a holding company. It could need to inject about $15 billion into Taunus as a result, analysts at Espirito Santo said.
And the UK's Barclays has restructured part of its U.S. operations and may have to shift funds around to meet stricter requirements for parts of its business, though it is likely to be less affected than Deutsche.
The Fed must impose tougher capital and other requirements on big banks, including foreign banks with substantial operations in the U.S., as part of its responsibilities under the Dodd-Frank law.
Regulators have put out draft rules for U.S. banks but had not
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