WASHINGTON Jan 15 The American Bankers
Association on Wednesday dropped its request for emergency
relief from a provision of the Volcker rule after financial
regulators eased some of the rule's requirements.
The ABA, one of the largest U.S. banking trade groups, said
it was still considering whether to end a lawsuit against the
Federal Deposit Insurance Corp and other U.S. agencies over an
aspect of the rule that had frustrated small banks.
The Volcker rule bans banks from making speculative bets
with their own money and restricts their investments in certain
funds. Small banks said it would force them to dump some
investments backed by trust-preferred securities, or TruPS,
which have hybrid characteristics of debt and equity.
The bank group sued regulators over the dispute. On Tuesday,
the agencies tweaked the Volcker rule to allow banks to hold on
to certain TruPS-backed investments if they obtained them before
the rule was finalized in December.
The ABA said that convinced it to drop the request for
emergency relief from the rule but that its members still needed
to consider the change before making a decision about the
Several lawmakers praised regulators for coming to a quick
decision on the change during a hearing of the House of
Representatives Financial Services Committee on Wednesday.
"I appreciate the regulators' responsiveness on this point,
and believe their recent interim rule has provided important
relief to community banks," said Representative Maxine Waters of
California, the committee's top Democrat.
Committee Republicans and banking industry representatives
said the narrow fix did not relieve all of their concerns,
including about the rule's impact on collateralized loan
obligations, or securities formed by pooling business loans.