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Monday, January 13, 2014

Manchin, Wicker Offer Asset Threshold for TruPS Relief

Sens. Joe Manchin (D-W.Va.) and Roger Wicker (R-Miss.) introduced a bill that would address the TruPS issue in the Volcker Rule only for banks with less than $50 billion in assets. Wicker is also a cosponsor of the Kirk bill.

ABA has said that relief on the TruPS issue should not be based on asset size. “Issuing TruPS enabled community banks to raise long-term funds that the regulators allowed to count as capital,” said ABA President and CEO Frank Keating in a letter to House leaders supporting the Capito-Hensarling bill.

“Most community banks have limited access to outside capital, so … those banks could only issue TruPS if there were a market for them of willing buyers,” he explained. “This market demanded a pooling of TruPS issued by several banks (into the TruPS CDOs), and relies not just on other small banks as investors.”

Sen. Sherrod Brown (D-Ohio) also weighed in, urging regulators to treat banks equally on the TruPS issue. “While they may be larger than their community bank colleagues, regional institutions engage in traditional services,” Brown said. “If a practice is sound for one group of institutions, then it should be sound for the other.”

Read the Manchin-Wicker bill.
Read Keating’s letter.
Read Brown’s letter.

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