“First, there was the TruPs crisis, as everyone surely recalls.”

“No?”

“Well, after the Volcker Rule was completed, some banks suddenly realized that they might have to sell some obscure holdings to conform to the rule — bundles of investments in banks, called trust-preferred securities, or TruPs. The American Bankers Association reacted immediately, warning that the nation’s community banks faced an avalanche of losses. Legislators readied bills to fix the problem that was supposedly facing banking’s little guys. Regulators felt embattled.”

“Then, the watchdogs tweaked the rule modestly, and the squall dissipated as quickly as it had arisen.”

“No sooner had that issue been resolved when Washington convulsed with a new crisis, now upon us: the C.L.O. panic. Haven’t heard of this one, either? What, are you paying attention to something like the standoff in Ukraine when the fate of bank profits is at stake?”

“The House held a hearing last week to examine the issue. American Banker, a trade publication, ran an article with a headline that succinctly summarized the industry’s view: ‘How Dodd-Frank Might Kill the C.L.O. Market.’”

***

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