Banking regulators have altered provisions of the final Volcker Rule that industry participants said would have harmed community and mid-size banks by forcing them to immediately write down certain investments. An interim final rule, released by the agencies on Jan. 14, permits institutions to retain an interest in certain collateralized debt obligations (CDO) backed primarily by trust-preferred securities (TruPS) if certain qualifications are met.
Bankers were concerned that the final Volcker Rule, released by regulators on Dec. 10, 2013, would require institutions to divest themselves of certain “covered funds” by July 2015, including their investments in certain TruPS CDOs. Moreover, industry participants said accounting norms would essentially force banks to write down assets immediately.