Joint Release
Board of Governors of the Federal Reserve System
Commodity Futures Trading Commission
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Securities and Exchange Commission
For Immediate Release January 14, 2014
Agencies Approve Interim Final Rule Authorizing Retention of Interests in
and Sponsorship of Collateralized Debt Obligations Backed Primarily
by Bank-Issued Trust Preferred Securities
Five federal agencies on Tuesday approved an interim final rule to permit banking
entities to retain interests in certain collateralized debt obligations backed primarily by
trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619
of the Dodd-Frank Wall Street Reform and Consumer Protection Act, known as the
Volcker rule.
Under the interim final rule, the agencies permit the retention of an interest in or
sponsorship of covered funds by banking entities if the following qualifications are met:
• the TruPS CDO was established, and the interest was issued, before May 19,
2010;
• the banking entity reasonably believes that the offering proceeds received by the
TruPS CDO were invested primarily in Qualifying TruPS Collateral; and
• the banking entity's interest in the TruPS CDO was acquired on or before
December 10, 2013, the date the agencies issued final rules implementing
section 619 of the Dodd-Frank Act.
The federal banking agencies on Tuesday also released a non-exclusive list of issuers
that meet the requirements of the interim final rule.
The interim final rule defines Qualifying TruPS Collateral as any trust preferred security
or subordinated debt instrument that was:
• issued prior to May 19, 2010, by a depository institution holding company that as
of the end of any reporting period within 12 months immediately preceding the
issuance of such trust preferred security or subordinated debt instrument had
total consolidated assets of less than $15 billion; or
• issued prior to May 19, 2010, by a mutual holding company.
Section 171 of the Dodd-Frank Act provides for the grandfathering of trust preferred
securities issued before May 19, 2010, by certain depository institution holding
Board of Governors of the Federal Reserve System
Commodity Futures Trading Commission
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Securities and Exchange Commission
For Immediate Release January 14, 2014
Agencies Approve Interim Final Rule Authorizing Retention of Interests in
and Sponsorship of Collateralized Debt Obligations Backed Primarily
by Bank-Issued Trust Preferred Securities
Five federal agencies on Tuesday approved an interim final rule to permit banking
entities to retain interests in certain collateralized debt obligations backed primarily by
trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619
of the Dodd-Frank Wall Street Reform and Consumer Protection Act, known as the
Volcker rule.
Under the interim final rule, the agencies permit the retention of an interest in or
sponsorship of covered funds by banking entities if the following qualifications are met:
• the TruPS CDO was established, and the interest was issued, before May 19,
2010;
• the banking entity reasonably believes that the offering proceeds received by the
TruPS CDO were invested primarily in Qualifying TruPS Collateral; and
• the banking entity's interest in the TruPS CDO was acquired on or before
December 10, 2013, the date the agencies issued final rules implementing
section 619 of the Dodd-Frank Act.
The federal banking agencies on Tuesday also released a non-exclusive list of issuers
that meet the requirements of the interim final rule.
The interim final rule defines Qualifying TruPS Collateral as any trust preferred security
or subordinated debt instrument that was:
• issued prior to May 19, 2010, by a depository institution holding company that as
of the end of any reporting period within 12 months immediately preceding the
issuance of such trust preferred security or subordinated debt instrument had
total consolidated assets of less than $15 billion; or
• issued prior to May 19, 2010, by a mutual holding company.
Section 171 of the Dodd-Frank Act provides for the grandfathering of trust preferred
securities issued before May 19, 2010, by certain depository institution holding
companies with total assets of less than $15 billion as of December 31, 2009, and by
mutual holding companies established as of May 19, 2010. The TruPS CDO structure
was the vehicle that gave effect to the use of trust preferred securities as a regulatory
capital instrument prior to May 19, 2010, and was part of the status quo that Congress
preserved with the grandfathering provision of section 171.
The interim final rule also provides clarification that the relief relating to these TruPS
CDOs extends to activities of the banking entity as a sponsor or trustee for these
securitizations and that banking entities may continue to act as market makers in TruPS
CDOs.
The interim final rule was approved by the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the
Currency, the Commodity Futures Trading Commission, and the Securities and
Exchange Commission, the same agencies that issued final rules to implement section
619. The agencies will accept comment on the interim final rule for 30 days following
publication of the interim final rule in the Federal Register.
###
Attachments:
• Interim Final Rule - PDF (PDF Help)
• Non-Exclusive List of TruPS CDOs - PDF (PDF Help)
Media Contacts:
Federal Reserve Board Barbara Hagenbaugh (202) 452-2955
CFTC Steve Adamske (202) 418-5080
FDIC Andrew Gray (202) 898-7192
OCC Bryan Hubbard (202) 649-6870
SEC Public Affairs (202) 551-4120
FDIC: PR-3-2014
mutual holding companies established as of May 19, 2010. The TruPS CDO structure
was the vehicle that gave effect to the use of trust preferred securities as a regulatory
capital instrument prior to May 19, 2010, and was part of the status quo that Congress
preserved with the grandfathering provision of section 171.
The interim final rule also provides clarification that the relief relating to these TruPS
CDOs extends to activities of the banking entity as a sponsor or trustee for these
securitizations and that banking entities may continue to act as market makers in TruPS
CDOs.
The interim final rule was approved by the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the
Currency, the Commodity Futures Trading Commission, and the Securities and
Exchange Commission, the same agencies that issued final rules to implement section
619. The agencies will accept comment on the interim final rule for 30 days following
publication of the interim final rule in the Federal Register.
###
Attachments:
• Interim Final Rule - PDF (PDF Help)
• Non-Exclusive List of TruPS CDOs - PDF (PDF Help)
Media Contacts:
Federal Reserve Board Barbara Hagenbaugh (202) 452-2955
CFTC Steve Adamske (202) 418-5080
FDIC Andrew Gray (202) 898-7192
OCC Bryan Hubbard (202) 649-6870
SEC Public Affairs (202) 551-4120
FDIC: PR-3-2014