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ABA threatens to sue over Volcker Rule

  • The financial harm is "real, imminent, and irreparable," says the American Bankers Association of a Volcker Rule provision restricting bank ownership of certain CDOs of trust-preferred securities. At least three smaller lenders - Zions Bancorp (ZION +1.8%) being the most prominent - have said they would have to write down or sell such assets immediately at a substantial loss.
  • It's an accounting issue: If these assets are covered by Volcker, lenders must move them from the held-to-maturity bin to the available-for-sale bin, and take the necessary marks in the process.
  • "Banking entities investing in pooled Trups that do not pose the kind of systemic risk the Volcker rule is intended to capture are facing unexpected and precipitous write-downs on these investments that are not justified by any safety and soundness concern," says the ABA. "The effect of the Volcker rule on banking entities holding these investments is itself causing safety and soundness concerns." Unintended consequences? Who could have guessed?
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Comments (2)
  • omarbradley
    , contributor
    Comments (966) | Send Message
     
    hmmm. "rule making." here's the rule: "he who has the gold makes the rules."
    23 Dec 2013, 08:25 PM Reply Like
  • marloo
    , contributor
    Comments (17) | Send Message
     
    In 1973 we had a manufactured gasoline crisis that forced "all" independent and small gasoline companies out of business. Only the big ones were winners. Kind of the same thing here to force the small banks out of the picture. The big banks like this.
    31 Dec 2013, 08:53 AM Reply Like
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