Deutsche Bank and other foreign banks with major U.S. operations say a Federal Reserve effort to force them to meet local capital standards puts them at greater risk of failure, and their regulators warn of reprisals.
Like U.S. banks, the Fed-regulated holding companies would have to meet capital standards and submit to stress tests. The rule, for which a public comment period ended earlier this week, would take effect July 1, 2015.
Deutsche Bank, continental Europe’s biggest bank, said the proposal would reverse international progress on global regulations and could 'increase the potential for failure' of a U.S. subsidiary because it hampers the foreign parent company from supporting it in times of stress.
'The daisy-chain effect would create systemic harm to the U.S. financial system as well as lead to global financial instability', said Jacques Brand, chief executive officer of Deutsche Bank North America, and Bill Woodley, deputy CEO, in a letter to the agency.
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