Most notably, the U.S. operations of foreign banks in the years leading up to the financial crisis grew much larger and became much more complex and interconnected with the rest of the U.S. financial system. For example, five of the top 10 U.S. broker-dealers are currently owned by foreign banks and together hold almost $ trillion in assets.
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.