Agencies Issue Interim Final TruPs CDOs Rule, Effective April 1

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Agencies Issue Interim Final TruPs CDOs Rule, Effective April 1

On The month of january 14, work from the Comptroller from the Currency (OCC), the Board of Governors from the Fed System (FRB), the government Deposit Insurance Corporation (FDIC), the Registration and also the Commodity Futures Buying and selling Commission approved an interim final rule allowing banking entities to retain interests in a few collateralized debt obligations backed mainly by trust preferred securities (TruPS CDOs), notwithstanding an investment prohibitions of Section 619 from the Dodd-Frank Wall Street Reform and Consumer Protection Act, referred to as Volcker Rule.

The interim final rule was printed within the Federal Register on The month of january 31, and grew to become effective on April 1. The OCC, along with the other rule-writing agencies, solicited comments around the interim final rule through March 3, 2014.

The interim final rule permits banking entities-including national banks, federal savings associations, and federal branches and agencies of foreign banks-to retain a desire for a TruPS CDO when the following qualifications are met:

  • the TruPS CDO started and also the interest was issued before May 19, 2010
  • the banking entity reasonably believes the offering proceeds received through the TruPS CDO were invested mainly in qualifying TruPS collateral and
  • the banking entity’s curiosity about the TruPS CDO was acquired on or before December 10, 2013, the date once the agencies issued final rules applying Section 619 of Dodd-Frank.

Qualified TruPS collateral includes any trust preferred security or subordinated debt instrument which was

  • issued before May 19, 2010, with a depository institution holding company that, by the finish associated with a reporting period inside the 12 several weeks immediately preceding the issuance of these trust preferred security or subordinated debt instrument, had total consolidated assets of under $15 billion or
  • issued before May 19, 2010, with a mutual holding company.

To assist community banks identify which CDO issuances remain allowable, the OCC, the FDIC, and also the FRB also provide issued a nonexclusive listing of TruPS CDOs that satisfy the needs from the interim final rule.

Find out more.


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