Seeking Alpha

Regulators mull change to Volcker Rule CDO provision

  • Regulators are considering whether it would be "appropriate and consistent" with the Volcker Rule to allow smaller banks to hold certain CDOs of trust-preferred securities that they may otherwise have to sell. Authorities plan to make a ruling by January 15.
  • The news comes after the American Bankers Association threatened to sue over the provision, which the industry group says would force 275 small banks to take a $600M hit to capital.
  • At least three lenders - Zions Bancorp (ZION) being the most prominent - have said they would have to write down or divest such assets immediately at a substantial loss.
  • Related ETFs: FAS, XLF, FAZ, UYG, KRE, KBE, VFH, IYF, SEF, IAT, IYG, PFI, FXO, KBWB, RKH, QABA, RWW, KRU, FINU, KBWR, RYF, PSCF, FNCL, KRS, FINZ
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