Pursuant to a congressional request, GAO reviewed the laws and regulations governing foreign banking operations in the United States.

GAO found that: (1) most foreign banks operate in U.S. wholesale banking markets, serve their home country and U.S. corporate customers, and engage in transactions with other financial institutions; (2) by the end of 1994, foreign banks held 17 percent of U.S. domestic banking assets; (3) foreign banks attained 24 percent of all U.S. commercial and industrial loans in December 1994, but they held a negligible share of the U.S. retail banking market during that same period; (4) although foreign banks are subject to the same laws and regulations as U.S. banks, they often receive different enforcement of these laws in their home countries; (5) changes in U.S. banking laws and regulations have diminished the competitive advantages previously enjoyed by foreign banks; and (6) national treatment of foreign banks is a concern for both U.S. and foreign bankers, since proposed legislation would expand the powers of bank holding companies and have a differential impact on U.S. and foreign banking operations.