The Federal Reserve Board on Tuesday approved a final rule clarifying the treatment of uninsured U.S. branches and agencies of foreign banks under section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, commonly known as the swaps push out provision. The final rule adopts without change the interim final rule issued by the Board on June 5, 2013.
Section 716 of Dodd-Frank generally prohibits the provision of certain types of federal assistance, such as discount window lending and deposit insurance, to swaps entities. The provisions of section 716 became effective on July 16, 2013.
Insured depository institutions that are swaps entities are eligible for a transition period of up to 24 months to comply and for certain statutory exceptions. The final rule clarifies that, for purposes of section 716, uninsured U.S. branches and agencies of foreign banks are treated as insured depository institutions. Thus, they are eligible to apply for a transition period and are treated as insured depository institutions for purposes of the other provisions of section 716.
The final rule also sets forth the process for state member banks and uninsured state branches or agencies of foreign banks to apply to the Board for the transition period.
The final rule is effective January 31, 2014.
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