100% not guaranteed: US banks quizzed over affiliates
US banks have been stripping foreign affiliates of parental guarantees so they – and their counterparties – can avoid US swap reforms. Politicians are angry and regulators are worried, which could spell trouble for the industry. Peter Madigan reports
At the start of June, lawyers at one big US bank had a phone call with staff from the Commodity Futures Trading Commission (CFTC). It lasted an hour and focused on a single topic – the bank's decision to strip parental guarantees from swap documentation between its London-based affiliate and around 20 foreign dealers, thereby protecting the affiliate and its dealer counterparties from US rules on
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