Treatment Of Trust Preferred Securities Under Dodd-Frank

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 capital.

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