Fed Sets Rules for Foreign Banks

The Federal Reserve approved new standards for foreign banks that will require the biggest to hold more capital in the U.S. Under the rules, foreign banks with U.S. assets greater than $50 billion would have to maintain more loss-absorbing capital than some other countries require, potentially forcing them to raise additional equity or debt for their U.S. units. The banks must have enough capital and liquidity to survive a credit crunch.

Fed Chairwoman Janet Yellen said the rules are necessary to protect the global financial system and put U.S. and foreign banks on equal footing. However, there is a disagreement with the Fed about the appropriateness of the new policies. Foreign banks have criticized the move, saying the requirements could conflict with home-country regulations and force them to withdraw from the U.S.

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