Guidance released by regulators meant to clarify the impact of the Volcker Rule on small institutions was quickly rejected by banks.

In a release Thursday, regulators detailed Frequently Asked Questions specifying that banks with trust-preferred collateralized debt obligations do not have to sell such holdings immediately, and rather have the time to figure out how they can be permitted under the rule.  

"It is a disaster," said Camden Fine, president of the Independent Community Bankers of America. "The FAQ put out by the regulatory agencies today does nothing to get the banks out from under the threat of having to take significant charge offs of capital at year end. Our banks had no warning, no advanced notice, no way to prepare for this. The regulators just laid this bomb on them less than three weeks before year end. It is the financial equivalent of Pearl Harbor."

Tim Pawlenty, the CEO of the Financial Services Roundtable, said that "this guidance does not provide the relief or the clarity the industry needs."

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