In this report, we build on our overall assessment of Treasury’s financial-reform report (see Client Report REFORM136) with a focus here on actions affecting foreign banking organizations (FBOs) doing business in the U.S.  Although Treasury’s approach to global rulemaking is an “America First” one (see Client Report REFORM138), the America-First approach taken also to FBO regulation would not only fragment the U.S. from the global framework but also provide considerable competitive advantage to many FBOs.  The new focus on the U.S. footprint – not parent-bank size – creates significant opportunities for FBO expansion, including through M&A structured to optimize regulatory requirements.  Treasury recommendations are in part aimed expressly at ensuring a level playing field for FBOs and U.S. banks abroad, reflecting that the FRB’s FBO rule (see FSM Report FBO3) is leading to host-country subsidiarization demands on U.S. banks.

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