Banks Given Two Extra Years for Some Securities To Comply With Volcker Rule
Fed Not Granting Exemption Industry Had Been Seeking
WASHINGTON—The Federal Reserve said Monday it will give banks that hold certain types of debt securities two years of extra time to conform those investments with the Volcker rule.
The Fed said banks would have more time to make sure their collateralized loan obligations don't fall under the rule's ban on speculative bank investments. Industry groups have said the rule would unfairly require some banks to divest their CLOs, which are bundles of predominantly commercial loans.
The Fed statement fell short of the exception from the rule the industry was requesting.
The Volcker rule is designed to prevent federally-insured banks from making some speculative bets, including owning certain types of investment funds. Under the definitions in the rule, a CLO could qualify as one of the banned investments.