On January 30, the five regulators responsible for Section 13 of the Bank Holding Company Act of 1956 (the “Volcker Rule”) each approved a set of amendments intended to modify and clarify the covered fund provisions of the regulations implementing the Volcker Rule. (The five regulators are the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission and the Securities and Exchange Commission.) The proposal includes the following elements:

  1. The proposed rule would permit bank investment in credit funds and venture capital funds.
  2. The proposal would exempt the activities of certain funds that are organized outside of the United States and offered to foreign investors (qualifying foreign excluded funds).
  3. The proposal would revise certain restrictions in the foreign public funds exclusion to more closely align the provision with the exclusion for similarly situated US-registered investment companies.
  4. The proposed rule would permit loan securitizations excluded from the rule to hold a small amount of non-loan assets, consistent with past industry practice, and codify existing staff-level guidance regarding this exclusion.

The comment period for the proposal runs until April 1.

The proposed rule is available here.