Two of the principal goals of the drafters of the Dodd-Frank Wall Street Reform and Consumer Protection Act (act), in response to the financial crisis of 2008, were to strengthen the safety and soundness of U.S. banks and to reduce the perceived risks to the financial system caused by some derivative transactions. Sections 610 and 611 of the act address those goals by limiting the counterparty credit risk to which insured depository institutions may be exposed through derivatives.
Section 610 amends §84 of the National Bank Act to require that national banks, in calculating their total loans and extensions of credit to any one person for purposes of the lending limit, include any credit exposure to the person arising from a derivative transaction between the bank and the person.
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