Global Standards Sought on Rules
Victoria McGrane (WSJ – subscription required)
September 16, 2011

“Treasury Secretary Timothy Geithner in a letter Wednesday assured Congress that the Obama administration and federal regulators are working with their international counterparts to see they adopt similar rules requiring market participants to back their over-the-counter derivatives trades with cash. ‘Just as we have global minimum standards for bank capital—expressed through international agreement—we need global minimum standards for margin on uncleared over-the-counter derivatives,’ Mr. Geithner said.  … Bank critics support efforts to apply the rules to overseas subsidiaries. They say that, since the U.S.-based parent of these complex global banks is ultimately responsible for the losses of its many far-flung subsidiaries, the transactions of those foreign affiliates affect U.S. commerce. ‘To say that we’re going to…exempt your thousands of majority-owned subsidiaries from all the U.S. [derivatives rules], it would be a very serious loophole in the system,’ said Marcus Stanley, policy director of Americans for Financial Reform, a group that advocates tougher financial regulation. U.S. bank regulators are optimistic an international deal can be reached on margin requirements, according to a person familiar with the matter.” Click here for more.