Contents
- The Federal Reserve and Trust Preferred Securities
- Do You have a Privacy Response Program?
- Consumer Litigation Report Page
THE FEDERAL RESERVE AND TRUST PREFERRED SECURITIES
It was a clear choice between GAAP (generally accepted accounting principles) and RAP (regulatory accounting practice). Hanging in the balance was approximately $85 billion of trust preferred securities issued by over 800 bank holding companies (BHCs). The accounting profession, through FASB Interpretation No. 46, had already issued guidance effectively disallowing capital treatment for trust preferred securities. On March 1, 2005, the Federal Reserve paid all due respect to GAAP, and then followed its own lead. The result is that billions of dollars of trust preferred securities issued by hundreds of BHCs will continue to receive Tier 1 capital treatment. Just as importantly, trust preferred securities remain a means by which BHCs can augment their capital. However, the rules have changed,
