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Risk of Banks Dodging Rules Leads to U.S. FDIC Scrutiny 

June 9, 2014
Jesse Hamilton, Silla Brush, Bloomberg

The U.S. regulator responsible for making sure banks aren’t too-big-to-fail is examining whether the biggest firms are shifting trades overseas in a way that may undermine rules designed to prevent a repeat of the 2008 financial crisis.

In recent months, large banks have restructured their overseas transactions in an effort to trade swaps -- contracts blamed for exacerbating the crisis -- outside of rules required by the 2010 Dodd-Frank Act.

That law also gave the Federal Deposit Insurance Corp. the power to take over and dismantle large, failing banks, a job that Vice Chairman Thomas Hoenig said Wall Street may be making tougher by the overseas dodge.

“The risks are pretty enormous,” Hoenig said in an interview, adding that the practice could grow and become a bigger threat. “We have a right to be concerned and should be.”

Read more: Bloomberg

 
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