The Federal Reserve is working on an agreement with the large foreign banks to prevent them from having to face the very heavy costs due to the changes in the regulation on derivatives trading decided by the United States Government. The main issue to be resolved remains that of prohibition of using US taxpayers' money to finance its activities on these kinds of products.
An amendment (the Lincoln amendment) contained in the finance reform launched by the Obama government in 2010 prohibits, in fact, those banks that have access to the insurance on deposits provided by the government from acting on the derivatives market. Some exemptions are included in the amendment, but they involve very few non-American institutions.
This being the case, therefore, the American divisions of foreign banks would be forced to move the entire derivatives business to external subsidiaries, with the consequent costs. The most plausible solution, and the one the Fed is working on, is that of the "separate entity doctrine", the separate entity doctrine, which would allow a branch of a foreign group to access the credit lines of the American Central Bank, while another branch of the same group would continue to work on the derivatives market.
