Fed draws industry concern about liquidity plan for foreign banks' US branches

10 April 2019 10:23pm
The US Federal Reserve’s request for public input on the question of whether to extend liquidity rules to foreign banks’ US branches is drawing the dismay of industry.

“The Fed already has ample supervisory tools to ensure the safety and soundness of US branch operations,” Briget Polichene, head of the Institute of International Bankers, said in an e-mail today. “We are concerned that imposing a novel liquidity requirement could have the consequence of promoting fragmentation and financial instability.”

The Fed sought feedback Monday on treatment of these US branches, which are not subject to standard liquidity requirements like overseas banks’ separately capitalized US subsidiaries.