On June 5, 2013, the Federal Reserve Board approved an interim final rule designed to give uninsured US branches and agencies of foreign banks the same treatment as domestic depository institutions under section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. That section of Dodd-Frank generally prohibits the provision of certain types of federal assistance, such as discount window lending and deposit insurance, to banks that are swap dealers unless they “push out” or limit their swap activities in approved ways. The provisions of Section 716 become effective on July 16, 2013. US insured depository institutions that are swaps dealers are eligible for a transition period of up to 24 months (plus a possible further extension of one year) to comply and for certain statutory exceptions. The interim final rule clarifies that, for purposes of Section 716, uninsured US branches and agencies of foreign banks will be treated in the same manner as US insured depository institutions. They will consequently now be eligible to apply for a transition period and other relief under Section 716.

Since the Dodd-Frank Act was passed, foreign banks have argued that Congress did not intend to prescribe different treatment of foreign and domestic banks under Section 716.

The new rule and the related Federal Reserve Press Release can be found here.