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Class Twenty-Seven: November 14, 2014
In today's class we will explore the business models and regulation of foreign banks in the United States, and compare with the principle of national treatment embedded in the International Banking Act of 1978 (IBA) with the concepts of substituted compliance and passporting as they later developed in the European Union. We will discuss the recent imposition of an intermediate holding company on the largest foreign banks operating in this country. Readings include, Foreign Banks in the US: A Primer, an analysis of the IBA by the Richmond Fed in 1979 and a speech by Governor Tarullo in 2014. You should also review two research papers for this class: one on extraterritorial application of the Volcker Rule and the second the second on the emergence of selective substituted compliance as a regulatory strategy for dealing with cross-border swaps. Both should be posted on the course iSite.
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