attempt to ameliorate past weaknesses in lending practices, and are working to emphasize that it is in all parties ’ best interests to continue making loans to creditworthy borrowers. the most recent guidance is the latest in a series of actions taken by the federal reserve and the other banking agencies to support sound bank lending and the credit intermediation process. in an effort to encourage prudent cre loan workouts, the federal reserve led the development of interagency guidance issued in october 2009 regarding cre loan restructurings and workouts. 4 that policy statement provides guidance for examiners and for financial institutions who are working with cre borrowers experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties, particularly as the loans on those properties mature and need to be refinanced. the statement is especially relevant to small businesses because owneroccupied cre often serves as collateral for small business loans. prudent loan workouts are in the best interest of both financial institutions and borrowers, particularly during difficult economic conditions. accordingly, the cre policy statement interagency statement on meeting the credit needs of creditworthy small business borrowers ( february 2010 ). interagency policy statement on cre loan restructurings and http : / / www. federalreserve. gov / newsevents / press / bcreg / 20091030a. htm. workouts ( november 2009 ) ; details risk - management practices for loan workouts that support prudent and pragmatic credit and business decision making within the framework of financial accuracy, transparency, and timely loss recognition. we hope that the detailed examples in that guidance will be of particular use to examiners, who themselves face the difficult task of assessing bank credit practices in this uncertain environment. immediately after the release of the cre guidance, the federal reserve conducted a systemwide teleconference with examiners to underscore the importance of this new guidance and promote its consistent application in all regions. in conjunction with the other federal and state banking agencies, federal reserve staff has participated in a number of teleconferences with various industry groups to discuss the guidance, which have reached several thousand bankers to date. examiner training and industry outreach will continue, and specific activities related to the guidance issued in early february targeting small businesses will augment existing examiner training. in january, the federal reserve launched a comprehensive systemwide training initiative to further

and significantly equalized regulatory treatment of foreign and domestic firms. 5 congress maintained this approach of basic competitive equality in the 1999 gramm - leach - bliley act. 6 that law substantially removed restrictions on affiliations between commercial banks and other kinds of financial firms for both domestic and foreign institutions operating in the united states. moreover, in light of provisions in gramm - leach - bliley that permitted a foreign bank to be a financial holding company ( fhc ), the federal reserve announced in 2001 that a bank holding company ( bhc ) in the united states that was owned and controlled by a well - capitalized and well - managed foreign bank generally would not be required to meet the board ’ s capital requirements normally applicable to bhcs. 7 my second example relates to the massive fraud uncovered at the bank of credit and commerce international ( bcci ) and its subsequent collapse in 1991, which highlighted the need for more effective supervision of banks operating in multiple countries. the foreign cross - border branches of foreign banks operate in the united states as a direct branch of the foreign parent and are not separately capitalized entities. federal foreign branches and agencies are authorized by 12 u. s. c. § 3102, which recognizes that states may also authorize branches of foreign banks to operate within their territory. the board of governors of the federal reserve system must approve all foreign branches and agencies, whether state or federal ( see 12 u. s. c. § 3105 ( d ) ). a good survey of the considerations for both firms and policymakers in the choice between subsidiaries and branches for foreign banks is provided in jonathan fiechter, inci otker - robe, anna ilyina, michael hsu, andre santos, and jay surti ( 2011 ), “ subsidiaries or branches : does one size fit all? ” staff discussion note 11 / 04 ( washington : international monetary fund, march 7 ), www. imf. org / external / pubs / ft / sdn / 2011 / sdn1104. pdf. between 1972 and 1977, the number of foreign banking institutions in the united states roughly doubled, while the total assets of those institutions roughly tripled in absolute terms and doubled as a proportion of all banking assets in the united states, reaching nearly 13 percent. henry terrell and sydney key ( 1977 ), “ the growth of foreign banking in the united states : an analytical survey ”, in key issues in international banking, conference series no. 18