http://www.economist.com/news/finance-and-economics/21596960-avoid-another-crisis-fed-further-fragments-global-finance-inglorious
This article talks about a new rule that the Fed has implemented towards foreign banks. They now must meet the same standards for capital and liquidity as American banks. The Fed sees this as a necessity for the global banking system. Foreign-owned banks previous leaned on their "parents" for support but now this rule will change how they must operate.
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This seems like a very regulatory legislation article implemented by The Fed. In the past, large banks such as Barclays and Deutsche Bank removed big American operations out of their holding companies into more lightly structured companies. Now, The Fed requires large foreign-owned banks to group all American subsidiaries under an intermediate holding company that must meet the same capital, liquidity and leverage standards as similarly sized American banks. This legislation effectively traps capital and liquidity at the local level and impedes a global bank from deploying money to its most productive destination, undermining the effects of being global. It will be interesting to see how this effects cross-border lending which has been declining since 2007.
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