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.

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