Financial Reforms, Obama sytle.

This is the thirty seventh in a series of articles on the financial reforms sought to be initiated by the Obama Administration in U.S.A.

Strengthening the FSB: The G-20 leaders had resolved to strengthen the FSB. As a first step, all the -20 members were included in the FSB. And the FSB was given the mandate for a new structure to enable it to promote global financial stability.
Prudential regulation: A global framework for promoting a stronger liquidity buffers at financial institutions, including cross-border ones is an avowed goal of the G-20. The FSB and BIS would jointly look for the development of macroprudential tools.
Expand scope of regulation: In the matter of regulation, higher standards would be applied to Tier I FHCs compared to other BHCs. The emphasis would be on the following aspects: stronger capital, liquidity and risk management standards. Systemically important financial institutions, markets, and instruments would be subject to commensurate level of regulation.
Foreign firms operating in the U.S. would be classified as Tier I FHCs where necessary, in line with similar treatment given to domestic companies. The U.S would treat foreign financial firms, in the matter of regulation, based on the regulatory regime in the home country of such firms.
The GLB Act lays down the ground rules for foreign firms to achieve the status of Tier I FHCs. In case of an American subsidiary of a foreign firm, it must be “well capitalized” and “well managed.” A foreign Bank that does not own or control an American one, but operates through a Branch must itself(Bank) be “well capitalized” and “well managed”. Where a foreign Bank operates through branches and subsidiary Banks, both the foreign parent and its U.S. subsidiary Bank must be “well capitalized” and “well managed”.
The Fed Reserve, in consultation with the Treasury, would determine the applicability of the above laws. Due regard would be given to the principle of “national treatment” and “equality of competitive opportunity”.
To be concluded.