On Wednesday, five federal agencies – the Commodity Futures Trading Commission, the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and the Securities and Exchange Commission (SEC) approved an interim final rule outlining the qualifications that must be met in order for banking entities to retain an interest in or sponsorship of certain collateralized debt obligations backed primarily by trust preferred securities (TruPS CDOs) from the investment prohibitions of section 619 of the Dodd-Frank Act's Volcker Rule (See our Dec 23, 2013, blog post for more information). They are accepting comment on the rule for 30 days. Under the interim final rule, the qualifications that must be met are that:

  • the truPS CDO was established and the interest was issued before May 19, 2010;
  • the banking entity reasonably believes that the offering proceeds received by the TruPS CDO were invested primarily in Qualifying TruPS Collateral; and
  • the banking entity's interest in the TruPS CDO was acquired on or before December 10, 2013, which is the date that these agencies issued final rules implementing section 619.

For more, read the full news release.