Fed Lets BNY Off the Hook

The Federal Reserve Board today announced the termination of enforcement action against the Bank of New York.

The enforcement action relates to an agreement between the Fed, the bank and the New York State Banking Department dated April 21, 2006. The agreement listed a number of steps the bank would take to address “deficiencies” regarding its compliance with anti-money-laundering laws.

Much has changed since then, as the agreement dates back to a time in BNY’s history before it merged with the Mellon Financial Corp. in 2007 to form the Bank of New York Mellon Corp. (BK: 26.19 -0.34%) seen today, a global financial company and top US asset manager with trillions of dollars in assets and under management.

BNY Mellon is intimately involved in the one of the government’s key liquidity programs, the Troubled Asset Relief Program. In October, the firm was hired as custodian of the TARP, where it would manage accounting and administrative duties. BNY Mellon received its own capital injection through TARP, which it announced this week it received permission to repay.

BNY Mellon offices in the Canary Wharf business district in London are also a popular place for foreign banks with large exposures to American assets to park capital reserves, according to a Housingwire source that works there.

The firm boasts a long history of partnership with the US government dating back to the bank’s founder, Alexander Hamilton, who served as the first Treasury Department secretary, and Andrew Mellon, who served as Treasury secretary during three presidential administrations.

Write to Diana Golobay.

Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.