Volcker Rule Exemption May Ease Curbs On CDOs

Federal banking regulators Tuesday responded to the Independent Community Bankers of America’s repeated calls for them to take action to rectify a Volcker Rule provision that could negatively affect hundreds of community banks.

Exemption for Trups-backed CDOs

The regulators’ proposition would exempt from the Volcker Rule all collateralized debt obligations backed by trust-preferred securities that were issued by banks with less than $15 billion in assets.

Interestingly, the new rule is worded in such a way that many large banks holding Trups-backed CDOs will also get the benefit.

The...