U.S. bank regulators said Friday that they would consider allowing banks to hold on to certain complex securities despite a new rule limiting risky investments. The announcement came after the American Bankers Association filed a lawsuit warning of hefty losses.
TheVolcker rule prohibits banks from owning hedge funds or private equity funds to reduce risk, but the ban included a type of security that community banks regard as harmless.
The regulators said they would now reconsider whether these instruments could be made exempt and would make a decision no later than Jan. 15.
A change would mark the first finessing of the Volcker rule, one of the most hotly debated provisions of the Dodd-Frank law, which was designed to overhaul Wall Street after the devastating financial crisis of 2007-09.
At stake are collateralized debt obligations backed by trust preferred securities — or TruPS CDOs — which have hybrid characteristics of both debt and equity and can get a favorable tax treatment.
The Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. had earlier told banks that they did not immediately need to sell the assets in question.
● General Motors’ China joint venture is recalling 1.46 million cars because of a defect with the fuel pump brackets, in one of the largest safety recalls in the world’s biggest auto market. The cars are made locally by Shanghai General Motors, GM’s venture with SAIC Motor. The recall affects two of GM’s most popular models in China: the Buick Excelle compact car and the Chevrolet Sail subcompact.
● John Krafcik, chief executive of Hyundai Motor America, is stepping down next week after five years at the helm, the company said. When Krafcik became CEO of American operations in 2008, the South Korean automaker’s cars were ugly and often broke down. During his tenure, he pushed through quality, style and fuel efficiency improvements to help drive up sales.
● Apple CEO Timothy Cook received a compensation package valued at nearly $4.3 million this year, up slightly from 2012. Cook’s pay for fiscal 2013, which ended in September, consisted of $1.4 million in salary and a bonus of $2.8 million, according to a regulatory filing. Cook’s compensation also included $52,721 in company contributions to his 401(k) account, life insurance premiums and a vacation cash-out.
● A group of teachers and public school officials filed a class-
action lawsuit in state court seeking to void Illinois’ new pension reform law on grounds that it violates protections for public sector worker retirement benefits in the Illinois Constitution. The measure, signed into law by Gov. Pat Quinn (D) this month, seeks to repair the state’s $100 billion unfunded pension liability by reducing and suspending cost-of-living increases for pensions, raising retirement ages and limiting the salaries on which pensions are based.
— From news services