The Federal Reserve approved new standards for foreign banks that will require the biggest to hold more capital in the U.S., joining other countries in erecting walls around domestic financial systems.
Banks with $50 billion of assets in the U.S. will have to meet the standard under a revised rule approved yesterday, which raised the threshold from $10 billion proposed in 2012. The central bank left out two controversial elements of the original proposal, saying those were still being developed.
Walling off U.S. units of foreign banks, designed to protect taxpayers from having to bail them out in a crisis, may increase those companies’ borrowing costs and hurt their profitability. The firms say it will also raise borrowing rates for governments and consumers.