In the wake of the American Bankers Association’s lawsuit challenging the Volcker Rule’s treatment of collateralized debt obligations (CDOs) backed by trust preferred securities (TruPS), the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Securities and Exchange Commission (the Agencies) have issued a statement which appears to signal that they are considering walking the rule back. The question is to what extent the Agencies will reverse themselves. The December 27 statement states in pertinent part as follows: [The Agencies] are currently reviewing this matter and are considering whether it is appropriate and consistent with the provisions of the Dodd-Frank Act not to subject pooled investment vehicles for TruPS, such as collateralized debt obligations (CDOs) backed by TruPS (TruPS CDOs), to the prohibitions on ownership of covered funds in section 619 of the Dodd-Frank Act. The Agencies are aware that the provisions of section 171(b)(4)(C) are important to community banking organizations and, based on information recently received, understand that the investments and capital levels of a number of these organizations might be adversely affected if pooling vehicles formed for the purpose of holding TruPS are treated as covered funds. The Agencies are… Read full this story
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Agencies Appear to Signal Retreat on Collateralized Debt Obligations (CDOs) backed by Trust Preferred Securities (TruPS) Issue have 253 words, post on www.natlawreview.com at January 2, 2014. This is cached page on Law Breaking News. If you want remove this page, please contact us.