On Friday, July 17, 2015, the Federal Reserve released a proposal (the “Proposal”) to amend the capital plan and stress test rules for large bank holding companies and certain banking organizations with total consolidated assets of more than $10 billion. The proposed changes would take effect beginning with the 2016 capital planning and stress testing cycles, the submissions for which are due April 5, 2016 based on a planning horizon beginning with actual capital levels as of December 31, 2015. … Read More
For those anxiously awaiting the oft-promised FAQ on metrics from the interagency task force on Volcker, the OCC has provided the answer. In a Dear CEO letter dated yesterday, the OCC makes it clear in the following guidance that Volcker Rule metrics recording, as many of us have been saying for some time, begins on July 1st. The relevant text of the Dear CEO letter is below. Who knew that Dear CEO letters are the new FAQs?
… Read More
“Banks with trading assets and liabilities of at least $50 billion will be required to report metrics designed to monitor their permitted trading activities.
U.S. financial regulators found themselves on the receiving end of an outpouring of concern from lawmakers last Wednesday about the risks to the banking sector and debt markets from the treatment of collateralized loan obligations (“CLOs”) in the Volcker Rule final regulations. Regulators and others have come to realize that treating CLOs as if they were hedge funds is a problem and we now understand from Governor Tarullo’s testimony that the treatment of CLOs is at the top of the list for the new interagency Volcker task force. … Read More
Here is the bottom line for the Volcker TruPS CDOs interim final rule issued by the U.S. regulators yesterday.
No Relief for CLOs: The rule does not help CLOs at all.
TruPS CDOs: For TRuPS CDOs we believe it will be very helpful.
Specifically, the interim final rule permits any banking entity, large or small, to retain an interest in, or to act as sponsor (including as trustee) of, an issuer that is backed by TruPS so long as:
- The TruPS CDO issuer was established before May 19, 2010;
- The banking entity reasonably believes that the offering proceeds received by the issuer were invested primarily in Qualifying TruPS Collateral; and
- The banking entity’s interest in the vehicle was acquired on or before December 10, 2013 (unless acquired pursuant to an M&A).