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Thursday, June 21, 2012

ABA Urges Careful Implementation of DFA on Overseas Branches

ABA President & CEO Frank Keating wrote to the CFTC regarding the dangers of CFTC regulations on overseas U.S. bank branches.
Many aspects of the implementation of the Dodd-Frank Act have the potential to disrupt and damage this historical business model, and we urge the regulators to exercise their respective authorities with care to avoid unnecessary harm to the branch banking model.

We understand the CFTC is considering this week including, in interim guidance regarding the extra-territorial application of proposed and pending swaps rules, provisions that would do two things: one, fail to provide overseas branched of U.S. banks the same phase-in relied offered to both overseas subsidiaries and to foreign banks operating in the U.S., and two, reverse the historical banking and securities law treatment of non-U.S. branches by considering them ‘U.S. persons’ for application of the swaps rules.

In the intermediate and long term, if these provisions progress, we can also expect a loss of U.S. jobs and capital to foreign jurisdictions.
Read Keating’s full letter.

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