On the heels of financial regulators releasing a final version of the Volcker rule, the first batch of what will likely be voluminous guidance has arrived. It is intended to assure community banks that they may not need to immediately divest certain holdings.
Three of the five agencies that jointly enacted the ban on proprietary trading by banks earlier this month – the Federal Reserve Board, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation – released a “Frequently Asked Questions” document to provide clarification and guidance on whether collateralized debt obligations backed by trust preferred securities (TruPS CDOs) would fall under the Volcker rule’s definition of “covered funds.”
