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The state of the Volcker TruPS debate

"The latest policy debate over the Volcker rule is coming to a head at regulatory agencies and in Congress, where it has been caught up in the politics over how to treat small banks and big banks.

"At issue is how regulators or lawmakers should respond to the howls of protests from community banks that say the proprietary trading ban will force them to sell certain securities — collateralized debt obligations backed by trust preferred securities, or TruPS — and hit their bottom lines hard when the intent of the rule is to crack down on Wall Street giants.

"Regulators and lawmakers are sympathetic but any changes could benefit large banks as well — and there’s the rub.

'How to craft an exemption is proving difficult."


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