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Hal S. Scott, Shackling Foreign Banks Is Bad Policy, Am. Banker, Apr. 30, 1991, at 4.


Abstract: By requiring foreign banks to operate through a U.S. subsidiary, the United States does exercise more control over the safety and soundness of the foreign bank's presence in the United States. A U.S. bank could support U.S. banking activities conducted through interstate branches with the entire capital of its bank, whereas a foreign bank operating through interstate branches of a U.S. subsidiary could support only those banking activities with the capital of that subsidiary. The Basel Accord, together with a U.S. requirement that banks operating through branches in the United States comply with the accord, minimizes the competitive inequality that might otherwise result if foreign and U.S. banks were subject to different capital requirements.