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Friday, January 10, 2014

Senate Bill Introduced to Fix Trust-Preferred Issue

Senators Mark Kirk (R-IL) and six other Republican Senators introduced legislation (S. 1907) that would remedy the Volcker Rule’s treatment of debt interests in TruPS by clarifying that the Volcker Rule does not require banks to divest CDOs backed by TruPS issued before December 10, 2013.

The bill – cosponsored by Sens. Mike Crapo (R-ID), Pat Toomey (R-PA), John Barrasso (R-WY), Mike Enzi (R-WY), Jerry Moran (R-KS), and Roger Wicker (R-MS) – is substantially similar to legislation (H.R. 3819) introduced earlier this week by Rep. Shelley Moore Capito (R-WV) and House Financial Services Committee Chairman Jeb Hensarling (R-TX).

Sen. Joe Manchin (D-WV) and Sen. Roger Wicker (R-MS) also introduced legislation (S. 1912) to address the TruPS issue, though his legislation applies only to institutions with assets of $50 billion or less.

ABA believes there should be no size restriction on any relief Congress might provide on this issue. Sen. Kirk’s press release makes this point as well, stating that “such a limit could effectively freeze out an important segment of the investor market.”

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