Mnuchin non-US prudential standards spark debate

Author: John Crabb | Published: 4 Jul 2017

The US Treasury Department’s recently released report on how to recalibrate the US financial system focuses on the application of enhanced prudential standards to foreign banking organisations (FBOs) based in the country.

The suggested measures have been taken as a victory by the Institute of International Bankers (IIB),  but other market observers argue that the current FBO provisions established post-2008 are necessary to minimise risk to the US financial system.

Treasury secretary Steven Mnuchin’s report to President Trump- A Financial System That Creates Economic Opportunities - states that the assets of foreign banks "should be based on their US risk profile, using the same revised threshold as is used for the application of the enhanced prudential standards to US bank holding companies, rather than on global consolidated assets."

The report continues, outlining how section 165 of the Dodd-Frank Act requires FBOs with less than $50 billion in global...