Bank-industry groups and Republican lawmakers called for broader Volcker Rule revisions a day after regulators permitted exemptions for some collateralized debt obligations faulted for obscuring lenders’ capitalization, Bloomberg News reported today. Representatives of the Securities Industry and Financial Markets Association and other groups joined House Financial Services Committee members in highlighting the “unintended consequences” of the proprietary-trading rule at a hearing yesterday. Lawmakers and lobbyists alike said that the Jan. 14 move to shield some CDOs backed by trust-preferred securities wasn’t enough to protect banks and the public from harm. “While we welcome the relief provided to certain holders of TruPS CDOs, we believe that regulators must address the larger problem of the inclusion of senior debt securities issued by collateralized loan obligations,” Sifma Chief Executive Officer Kenneth Bentsen said at the hearing. “If this situation is not remediated, corporate borrowers could face higher credit costs and banks will likely suffer unnecessary losses.”
