Supervision of International Operations of U.S.
Banking Organizations
The Federal Reserve also has supervisory and regulatory responsibility
for the international operations of member banks (that is, national and state
member banks) and bank holding companies. These responsibilities include:
- Authorizing the establishment of foreign branches of national
banks and state member banks and regulating the scope of their activities
- Chartering and regulating the activities of Edge and agreement
corporations, which are specialized institutions used for international and
foreign business.
- Authorizing foreign investments of member banks, Edge and
agreement corporations, and bank holding companies and regulating the
activities of foreign firms acquired by such investors.
- Establishing supervisory policy and practices regarding foreign
lending by state member banks.
Under federal law, U.S. banking
organizations generally may conduct a wider range of activities abroad than they
may conduct in this country.
The Board has broad discretionary powers to regulate the foreign
activities of member banks and bank holding companies so that, in financing
U.S.
trade and investments abroad, U.S. banking
organizations can be fully competitive with institutions of the host country. U.S. banks also may conduct deposit and loan
business in U.S.
markets outside their home states through Edge and agreement corporations if the
operations of the corporations are related to international transactions.
The Federal Reserve examines the international operations of state
member banks, Edge and agreement corporations, and bank holding companies
principally at the U.S. head
offices of these organizations. When appropriate, the Federal Reserve will
conduct an examination at the foreign operations of a U.S. banking organization
in order to review the accuracy of financial and operational information
maintained at the head office as well as to test the organization’s adherence to
safe and sound banking practices and to evaluate its efforts to implement
corrective measures. Examinations abroad are conducted in cooperation with the
responsible foreign country supervisor.
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