Agencies Issue FAQ to Clarify the Capital Treatment of Collateralized Debt Obligations

The FDIC, the OCC, the Board of Governors of the Federal Reserve System, the SEC and the CFTC issued a Frequently Asked Questions document to clarify the capital treatment of certain Collateralized Debt Obligations backed by Trust Preferred Securities ("TruPS CDO") under Section 13 of the Bank Holding Company Act. Specifically, the updated FAQ clarifies that the Volcker Rule does not require a banking entity to deduct from its tier 1 capital an investment in a Qualifying TruPS CDO retained pursuant to 12 CFR 351.16 of the interagency interim final rule.