Fed proposal likely to relax rules for foreign banks

Few FBOs will face toughest level of regulation, according to Fed estimates

A Federal Reserve plan to align prudential requirements for foreign banking organisations with the risks they pose to the US financial system would spare many firms from fully-loaded capital, liquidity and stress-testing rules. 

The Fed proposes to sort FBOs into four categories based primarily on their total US assets, cross-jurisdictional activity and reliance on short-term wholesale funding (STWF). Banks in category two would face the toughest standards of all FBOs; those in category three