WASHINGTON, April 29 (Reuters) - The U.S. House of Representatives approved a bill on Tuesday that would scale back the Volcker rule to exempt a type of securities that banks want to keep on their books.
The Volcker rule, named for former Federal Reserve Chairman Paul Volcker, bars banks from making risky trades with their own money and limits their investments in certain funds. It was required by the 2010 Dodd-Frank law.
When regulators finalized the rule in December 2013, banks complained it would force them to sell some collateralized loan obligations (CLOs), or bundles of business loans packaged as securities. Some lawmakers sided with the firms, saying they did not intend to force banks to dump the investments.
The House approved a bill that would exempt from the rules any CLOs issued before Jan. 31, 2014.
Representative Andy Barr, a Kentucky Republican who introduced the bill, called it a “a bipartisan clarification that fixes a regulatory problem” in a statement after the vote.
The bill still must go through the Democrat-controlled U.S. Senate, where its passage is unclear. Democrats have been hesitant to consider any adjustments to Dodd-Frank for fear its critics would try to create an opportunity to revamp the law.
Regulators already had adjusted the Volcker rule to let banks hold onto another type of security after small firms claimed it would cause them to lose money. (Reporting by Emily Stephenson. Editing by Andre Grenon)