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Fed Toughens Rules for Large Foreign Banks

The Federal Reserve will require the largest foreign banks operating in the United States to hold higher levels of capital reserves to protect against potential loan losses.

New Federal Reserve Chairwoman Janet Yellen
New Federal Reserve Chairwoman Janet Yellen (T.J. Kirkpatrick, Getty Images)

The stricter regulations the Fed has adopted are intended to prevent the types of threats that contributed to the 2008 financial crisis. The requirements are similar to those already adopted for big U.S. banks.

Fed Chair Janet Yellen, presiding at her first public meeting of the central bank’s board, says the changes will “help address the sources of vulnerability” exposed by the crisis. The rules were adopted by a 5-0 vote.

Foreign banks had objected to the changes. They argued that the stricter rules would raise the cost of doing business in the United States and reduce the loans they could provide.

 

(Copyright 2014 by The Associated Press. All Rights Reserved.)

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