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Friday, December 19, 2014

ABA Wins Extension of Volcker Rule Covered Funds Deadline

The Federal Reserve extended the date by which banks must comply with the Volcker Rule’s prohibition on owning interests in covered funds. Banks will now have until July 21, 2017, to comply. The extension will allow thousands of banks sufficient time to deal with these funds in an orderly way. ABA President and CEO Frank Keating said:

We are grateful that the Federal Reserve will give banks of all sizes the time they need to comply with the rule, thus minimizing potential disruption from hastily unwinding these funds. We especially appreciate that it applies to all legacy funds, as many banks are still determining exactly what is covered as they seek to comply.

Through letters and in-person meetings, ABA has strongly advocated for more time for bankers to address the complex Volcker Rule treatment of covered funds. Intended by Congress to limit investments in hedge funds, the final rule can be read to cover a much wider range of bank fund investments that help banks serve customers and promote economic growth.

The extension will allow banks to unwind their investments with less harm to customers and communities and to seek further clarification in cases where the rule’s application is unclear. The Fed used its authority under the Dodd-Frank Act to grant a one-year extension now and said it will grant another next year.

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