WASHINGTON Jan 14 (Reuters) - Five U.S. bank regulatory agencies on Tuesday approved a tweak to the Volcker rule that would allow banks to keep interests in certain funds backed by trust-preferred securities.
The change was aimed at easing small banks' concerns that they needed to dump certain investments they had previously thought would be allowed under the rule, losing money in the process. A bank trade group sued regulators over the dispute, and lawmakers from both parties have backed the banks.
Trust-preferred securities, or TruPS, have hybrid characteristics of debt and equity and can get favorable tax treatment.
Regulators said banks could keep certain collateralized debt obligations backed by TruPS if they obtained them before the Volcker rule was finalized on Dec. 10.