Fed to have power to demand firms cease trading or sell off
The US has published a draft law that would allow the Federal Reserve to order a firm to sell a risky division or stop a trading activity, the FT reports.
It would allow the Fed to demand firms "sell or otherwise transfer assets or off-balance sheet items to unaffiliated firms, to terminate one or more activities, or to impose conditions on the manner in which the identified financial holding company conducts one or more activities".
Foreign firms included
The law would cover foreign groups that own a large or risky US subsidiary. Firms would have to adhere to "heightened prudential standards".
These include leverage limits, liquidity rules and the drafting of a resolution plan, or "living will".
Companies would be placed in the new category if the council deemed that "material financial distress at the company could pose a threat to financial stability or the economy".
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