Deutsche Bank overhauls subsidiary in response to Dodd-Frank reform law A similar action was recently taken by Barclays Bank, the huge British-based firm. The action was first reported by the Wall Street Journal. Big banks are often assemblages of smaller financial firms. For example, a big bank might consist of a traditional commercial bank that holds the deposits of retail customers, gives loans to businesses and does other services, plus an investment firm that engages in fancier forms of finance, such as trading. It's even more complicated with foreign banks, which have a U.S. subsidiary that may then be broken into further parts. Deutsche Bank's U.S. subsidiary is named Taunus Corp., which has two main subsidiaries of its own: a commercial bank and an investment firm. Taunus is one of the biggest financial institutions in the United States - with $354.7 billion in assets and 8,652 employees. Dodd-Frank requires commercial banks to hold more capital than investment firms. Right now, Taunus's commercial banks meet one capital requirement and its investment arm meets the other. Taunus isn't required to meet an overall capital level. But under Dodd-Frank, that would change in 2015, and Taunus would have to hold a lot more capital overall because it contained a commercial bank. So in response, Deutsche Bank has now removed the commercial bank from Taunus, while keeping it within the overall auspices of the global Deutsche Bank structure. Regulators allowed the action. As a result, Taunus won't have to meet the higher capital requirements. Its investment subsidiary will still have to meet the capital requirements required by regulators under Dodd-Frank. Likewise, the commercial bank will have to meet the capital requirements required by regulators under Dodd-Frank. "In most cases, as long as deposit-taking commercial banks are regulated as such, it is not necessary to regulate their non-bank affiliates as if they were banks," Robert C. Hockett, a Cornell law professor, said in an e-mail. There are some exceptions, however, in which non-bank institutions expose even well regulated affiliated banks, or the financial system as a whole, to new risks. William Black, a former bank regulator now at the University of Missouri, was more skeptical of Deutsche Bank's actions. "Of course, they're trying to avoid regulation," he said. That's the sole purpose of what they're doing.