The U.S. operations of large foreign banks also became much more dependent on the most unstable sources of short-term wholesale funding and established very substantial net credit exposures to the parent foreign bank in the years leading up to the financial crisis. As a result, during the crisis, these banks were heavy users of the Federal Reserve’s liquidity facilities.
Under the proposed rule, foreign banking organizations with a large U.S. presence would be required to organize their U.S. subsidiaries under a single U.S. intermediate holding company that would serve as a platform for consistent supervision and regulation.