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Bankers Say Clarification of CDOs Under Volcker Falls Short

U.S. banking regulators provided advice on how banks should treat certain securities in a document quickly panned by industry groups for failing to address their concerns that the newly finalized Volcker Rule will force banks to take losses on the securities.

Banking groups had pressed regulators to make clear how smaller banks should account for collateralized debt obligations backed by trust-preferred securities, which were included among investments limited in the Volcker Rule’s ban of certain risky bank trades. The institutions have been preparing for potential writedowns of the holdings under the rule.