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December 19, 2013

U.S. Regulators Working On Guidance to Clarify Volcker Rule's CDO Provision

U.S. banking regulators are considering issuing guidance to address concerns about the Volcker rule’s impact on some small and midsize banks, according to people familiar with the matter.

The new guidance, which is being considered barely a week after the voluminous rule’s release, comes as concerns mount that banks will take a hit to their capital levels or earnings as a result of a provision that some analysts interpret as prohibiting firms from investing in collateralized-debt or collateralized-loan obligations.

The regulatory guidance could give banks time to sort out how the new rules apply to them but may not lift the ban on those types of investments, the people familiar with the matter said. However, regulators could explain the rule’s exceptions to help banks understand whether their investments qualify for exemption or need to be shed.”

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Read full Wall Street Journal article here

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