Title: Foreign bank regulation after BCCI
First published: 1994
Description: The BCCI affair was the world's greatest financial fraud. It triggered a revolution in the domestic and international legal regimes governing foreign banks. Foreign Bank Regulation After BCCI is the first book to examine this legal revolution. The book treats not only the new U.S. laws and regulations governing foreign banks, but also the new international standards applicable to cross-border banking institutions.

After carefully explaining the salient facts of the BCCI case and providing important background information on foreign banking in Part I, the book poignantly analyzes the legal revolution.

"Good case, bad law" is the thesis of Foreign Bank Regulation After BCCI. Part II argues that new U.S. laws and regulations are an overreaction to the BCCI affair. Fearing "bad" foreign banks, congress and the Federal Reserve implemented rules that are protectionist, unilateralist, and nonresponsive. They make foreign bank entry into the U.S. far more difficult than ever before. The rules empower the Federal Reserve to take serious actions with respect to foreign banks on its own.

Paradoxically, the rules do not necessarily address the problems raised in the BCCI case. Part III argues that the new international standards are unhelpful and evasive. These standards, issued by the Bank for International Settlements in Basle, Switzerland, rely on a traditional but problematic approach to foreign bank regulation. Worse, the standards fail to address key issues raised in the BCCI case regarding bank examinations and bank insolvency.

The book sets forth proposals for legal reform in Part IV, most notably in the areas of international bank insolvency and international trade in banking services. It offers principles that could form the basis for an international bank bankruptcy convention and highlights the conceptual foundations of the new General Agreement on Trade in Services.
Subjects: Bank of Credit and Commerce International, Banks and banking, Foreign, Corrupt practices, Foreign Banks and banking, Law and legislation, State supervision, Banking law, Banks and banking, state supervision
Places: United States
LC classification: KF1001.5 .B48 1994