SIC 6082 Foreign Trade and International Banking Institutions
SIC 6082
This category covers establishments of foreign trade companies operating in the United States under federal or state charter for the purpose of aiding or financing foreign trade. Also included in this industry are federal or state chartered banking institutions that only engage in banking outside of the United States.
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International Trade Financing
The deregulated posture of the U.S. financial sector in the late 1990s resulted in a more international banking market by the mid-2000s. While, for much of the twentieth century, the regulatory environment was aimed at restraining banking concentration and bank involvement in other financial activities, such restrictions gave way to more liberalized capital flows and a more relaxed attitude toward consolidation and foreign involvement, both by U.S. banks operating overseas and by foreign banks in the United States. According to the Institute of International Bankers, in the 2000s, three other factors also contributed to the increasingly international nature of banking: the reliance of national economies on one another, the globalization of trade, and technological developments that enhanced communication and transportation.
The number of foreign banks with offices in the United States totaled 476 at the end of 2004 (down from 620 in 2000), controlling assets of $1.55 trillion (up from $1.3 trillion in 2000). Of the institutions in operation in 2004, 231 were branch banks; 45 were agencies; and 67 were subsidiaries more than 25 percent owned by branch banks; 130 were U.S. representative offices of foreign banks; and three Edge Act and Agreement Corporations.
In 1919, the U.S. government adopted a federal law called the Edge Act named for its sponsor, Republican Walter E. Edge of New Jersey. The Edge Act of 1919 allowed the Federal Reserve to charter foreign and domestic banks to permit them to participate in international trade finance and investment through what became known as Edge Act banks. These banks were allowed to expand their offices in more than one state without the usual nonbanking restrictions.
An Edge corporation offers foreign banks and their affiliates ways to expand operations in the United States without being subject to the nonbanking restrictions set by the Bank Holding Company Act of 1956. Edge banks can accept deposits and engage in a broad array of financial activities, without necessitating a foreign office to purchase international loans or process credit.
The late 1970s witnessed a great expansion of Eurobanks, which acquired an increased share of the U.S. banking market, generating heated political debate in the U.S. Congress. This dialogue resulted in the International Banking Act of 1978, implemented to equalize regulatory treatment of foreign and U.S. banks doing business in the United States. This act, along with revisions to Regulation K (International Banking Operations), gave foreign banks and affiliates the right to own a majority of shares in Edge corporations.
Prior to revisions to the Edge Act in 1984, the Fed used the "transaction-by-transaction" approach, which imposed fairly stringent constraints on the U.S. operations of the Edge banks. This approach required that all deposits to Edge corporations be related to international transactions and that all transactions with domestic residents be related to identifiable international transactions. With...
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