Federal Agencies Temporarily Approve TruPS-Backed CDOs for Small Banks, Notwithstanding Volcker (Fed. Reg. Version)

The Board of Governors of the Federal Reserve System ("FRB"), the CFTC, the FDIC, the Office of the Comptroller of the Currency and the SEC (the "Agencies") published in the Federal Register an interim final rule permitting banking entities to retain interests in certain collateralized debt obligations ("CDOs") backed primarily by trust preferred securities ("TruPS"), notwithstanding the investment prohibitions of Dodd-Frank Section 619 (the "Volcker Rule"), provided that the TruPS securities in the CDO in question consist predominantly of TruPS issued by a bank with less than $15 billion in assets as of May 19, 2010.

The Cabinet covered this in detail on January 14, 2013.

Effective Date: The interim final rule is effective on April 1, 2014.

Comments Due: Comments on the interim final rule should be received on or before March 3, 2014.

See: 79 FR 5223.See also:CFTC Acting Chairman Wetjen Statement of Support; CFTC Commissioner O'Malia Statement of Concurrence; SEC Commissioner Piwowar Statement of Dissent; SIFMA Statement.See generally: Cabinet Volcker Materials.Related news: Volcker Lawsuit on TruPS-Backed CDO (December 30, 2013) Agencies Are Reviewing Treatment of Specified Collateralized Debt Obligations under Volcker Rule (December 27, 2013); Banking Agencies Issue FAQ Document Regarding Collateralized Debt Obligations Backed by Trust Preferred Securities (December 20, 2013).