Rep. Shelley Moore Capito (R-W.Va.) and House Financial Services Committee Chairman Jeb Hensarling (R-Texas) introduced a bill that would remedy the Volcker Rule’s treatment of debt interests in trust preferred securities. The bill would clarify that the Volcker Rule does not require banks to divest collateralized debt obligations backed by TruPS issued before Dec. 10, 2013.
Banks holding TruPS CDOs have been concerned that they may need to sell their interests, often at a significant loss, with many banks determining that they needed to book those losses by the end of 2013.
In related news, staff for Sen. Joe Manchin (D-W.Va.) said he was working on similar Senate legislation. Hensarling, Capito and Manchin have all written to regulators urging them to exempt TruPS CDOs from the Volcker Rule.
View ABA resources on the Volcker Rule.
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