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In a speech delivered last week to the Yale School of Management, Federal Reserve Governor Daniel K. Tarullo signaled that the Board of Governors of the Federal Reserve System (FRB) is now considering major changes to the regulation of foreign banks and their affiliates in the United States. These regulatory changes suggested by Governor Tarullo would substantially expand the authority of the Federal Reserve to regulate capital, liquidity, and risk management of the U.S. operations of foreign banking organizations, and would result in the creation of a new form of Fed-regulated vehicle, the “intermediate holding company” (IHC). In that regard, he is suggesting a very substantial re-thinking of the manner in which the U.S. operations of global financial institutions are regulated, as well as increasing the cost of foreign banks conducting business in the U.S