The Dodd-Frank Wall Street Reform and Consumer Protection Act
(the "Act") was signed into law by President Obama on
July 21. The Act includes a number of important provisions of
interest that we will address in a series of Alerts to our banking
clients. The Act makes significant changes to the ability of bank
and thrift holding companies to issue trust preferred securities
("TRUPS") and continue to count them as Tier 1
History of the Legislation
The House-passed version of the legislation (H.R. 4173) did not
contain any provisions addressing the capital treatment of TRUPS.
The subsequent Senate bill included provisions inserted by Senator
Collins (R-Maine) that were supported by the FDIC, which would have
eliminated Tier 1 capital treatment for TRUPS. These provisions
were eased during the deliberations between the Senate and House of
Representative conferees that produced the Conference Report, which
was approved by the House on June 30 and the Senate on July 15.
Final Provisions of Dodd-Frank
The final rules concerning TRUPS are as follows:
Bank and thrift holding companies with assets of less than $15
billion as of December 31, 2009, will be permitted to include TRUPS
that were issued before May 19, 2010, as Tier 1 capital.
TRUPS issued before May 19, 2010, by larger bank and thrift
holding companies will continue to be treated as Tier 1 capital
until January 2013. At that time, the Tier 1 capital treatment will
be phased out over a three-year period ending in January 2016. The
specifics of this phaseout of Tier 1 capital treatment are to be
determined by the bank regulators.
Bank holding companies with assets of less than $500 million
will be permitted to continue to issue TRUPS and have them count as
Tier 1 capital.
TRUPS issued by a bank or thrift holding company (other than
those with assets of less than $500 million) after May 19, 2010,
will no longer count as Tier 1 capital. TRUPS still will be
entitled to be treated as Tier 2 capital.
Rarely does a day go by without news of a data security breach. According to the Identify Theft Resource Center, there have been a total of 447 data breaches to date this year, which represents a 20.5% increase over the same time period last year.
Earlier today, the Consumer Financial Protection Bureau released a consumer advisory outlining certain risks that may be associated with virtual currencies and announced that the CFPB will begin accepting consumer complaints regarding virtual currencies through its consumer complaint database.