Banks’ preemptive strike against Dodd-Frank

[ProSense]

Banks’ preemptive strike against Dodd-Frank

By Suzy Khimm

When Deutsche Bank reorganized its U.S. operations this week in response to new banking rules, it was the latest manifestation of what both supporters and opponents of the Dodd-Frank regulatory overhaul predicted would happen: The law has pushed big banks to reorganize — to comply with the new rules on Wall Street, as well as to avoid their impact...Deutsche Bank and London-based Barclays have moved their commercial banks from their U.S. subsidiaries into their global firms to avoid new, more stringent capital requirements — even though they don’t go into effect until July 2015.

But that doesn’t necessarily mean that Dodd-Frank has fallen short of what its authors intended. By giving up its status as a U.S. bank holding company, Deutsche Bank is forfeiting its access to the Federal Reserve’s emergency lending window. Doing so effectively cuts itself out of any future government-backed bailout in the event of a crisis. One of the overarching goals of Dodd-Frank was limiting taxpayer exposure to bailing out big firms.

“They’re saying, ‘If this is the price we have to pay, we’re going to shed that protection — we’re not too big to fail,’ ” said University of Maryland law professor Michael Greenberger, a former regulator at the Commodity Futures Trading Commission. Deutsche Bank was the Fed’s second-largest discount-window borrower during the 2008-2009 crisis.

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The Volcker Rule, which is scheduled to take effect in July, also prohibits banks from providing more than 3 percent of capital in private-equity or hedge funds, prompting banks to spin off those operations as well. Other Dodd-Frank rules recently prompted insurance giant MetLife to sell its FDIC-insured banking unit, which would have subjected the firm to greater regulation and scrutiny by the Federal Reserve.

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http://www.washingtonpost.com/business/economy/banks-preemptive-strike-against-dodd-frank/2012/03/23/gIQATnUmWS_story.html

[ProSense]

1. Kick!

Not much interest in regulations, huh?

[freshwest]

4. Perhaps not so much disinterest, as it's not simplistic enough for the masses...

Although we do have bankers here at DU, capable of saying something coherent, I'm sure. My eyes glaze over looking at it.

[dixiegrrrrl]

2. Why is The Fed giving free money to a foreign bank in the first place?

[ProSense]

3. These

"Why is The Fed giving free money to a foreign bank in the first place?"

...were foreign companies operating U.S. banks, using the U.S. as the base for their commercial banking operations. Evidently, some are giving up that practice to avoid oversight.