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As First Volcker Rule Victim Emerges, Implications Could "Roil The Market"

Tyler Durden's picture


Yesterday afternoon, Zions Bancorp, Utah's biggest lender, stunned the financial community with a regulatory filing in which it announced that as a result of the final Volcker Rule implementation, it will need to make some very dramatic changes to its balance sheet, which would also have a follow through, and quite adverse, impact on its income statement. To wit:

Zions Bancorporation (NASDAQ: ZION) (“Zions” or “the Company”) today announced that it believes substantially all of its portfolio of bank and insurance trust preferred collateralized debt obligation (CDO) securities, and certain other asset-backed CDO securities, will be considered disallowed investments under the revised, final “Volcker Rule” of the Dodd-Frank Act, which was released jointly by the Federal Reserve and a number of federal regulatory agencies last week. The final rule requires banking entities to divest such assets by July 21, 2015, unless, upon application, the Federal Reserve grants extensions to July 21, 2017.


Under the published rule, the Company would no longer have the ability to hold disallowed securities until the anticipated recovery of their amortized cost. Therefore, as of December 15, 2013, Zions anticipates that in the fourth quarter of 2013 it will reclassify all covered CDOs that currently are classified as “Held to Maturity” into “Available for Sale,” and that all covered CDOs, regardless of the accounting classification, will be adjusted to Fair Value through an Other Than Temporary Impairment non-cash charge to earnings. The net result would eliminate substantially all of the accumulated other comprehensive income adjustment to equity related to the covered securities.

In short: Zions can no longer keep TruPS (and perhaps any other kind) of "disallowed" CDOs on its books to maturity, explicitly in its "Held to Maturity" book and will instead be forced to dispose of these, in the process pushing them off to their "Available for Sale" inventory, and since this involves a Mark-To-Market repricing, hitting the Net Income line due to the P&L impact of moving a netting Comprehensive Income line item into the broader income statement where it would impair earnings materially on a non-cash basis (impacting equity, not cash).

This touches on several key regulatory loopholes that we have written about in the past, but more importantly, it exposes some key new ground that may lead to major impacts on bank capital and net income in the quarters to come, especially if indeed Zions is correct in its interpretation of Volcker, which suggest neither the Utah bank nor any of its peers will be able to hold either TruPS or potentially any other CDOs.

First of all, recall our recent series on unrealized bank "profits" (and losses) from Available for Sale books (courtesy of FAS 115), which recently plunged as a result of the surge in rates, hitting bank holdings of rate-sensitive securities held in AFS books. If indeed the Zions case study is a harbinger of things to come, look for this negative number (which in the past week dropped to the lowest cumulative total since the August near 3% on the 10 year blow out), to get even more negative.

But more importantly, should Zions be the canary in the coalmine on what Volcker means for bank prop holdings, then this is likely just the first shot across the bow of surprising announcements as one bank after another announces its intentions to reclassify and dispose of assets it had hoped to keep under the rug until Bernanke's reflation effort pushes their prices to their prior peak levels at which point they would no longer impair earnings even on a MTM basis.

To be sure, when it comes to just TruPS CDO holdings, it appears that Zions is the leader. Bloomberg reports:

Zions owned $1.23 billion of bank-issued trust-preferred CDOs as of Sept. 30, the most among all U.S. banks, according to analysts at Sterne Agee & Leach Inc. About 3 percent of U.S. banks held similar CDOs and a sudden sale by Zions could roil the market, Sterne Agee said.


“They are the 800-pound gorilla in this space,” Sterne Agee’s Matt Kelley said in an interview. “They have a lot at stake and they have an incentive not to tip their hand.”


The assets must be divested by July 21, 2015, unless regulators grant a two-year extension, Zions said.


“We’re not going to just go out and dump those things tomorrow,” Arnold said. “We’ll be exploring a variety of ways to come into compliance with the Volcker Rule, not all of which may involve the sale in the market.”

When anything could "roil the market", especially a market as illiquid as the current one, people pay attention. Even if for now the same people are happy to stick their heads in the sand and, unlike Zions, pretend Volcker does not apply to them. Sure enough:

All banks may not interpret the Volcker Rule the same way, according to Jason Goldberg, an analyst at Barclays Plc.


“There’s a lot of pages,” Goldberg said in an interview. “It’s going to take some time to figure this all out.”

Of course, if more banks end up with the same conclusion as Zions, then a roiling of the structured market is virtually assured.

At the end of the day it will all depend on a bank's interpretation of FAS 115 (and how Volcker accentuates this relationship) which, in a nutshell - see primer below - does not apply to unsecuritized loans. However, mortgage loans converted to mortgage-backed securities are subject to FAS 115 provisions. Furthermore, due to potential for impairment, interest only and super-premium MBS are not typically classified as "held to maturity." As of this moment neither are TruPS. What other securitization categories will emerge as having been held in HTM books and now have to be reclassified as AFS? We eagerly await the answer!

Which brings us to point #2, one which is likely far more important:

Under the Volcker rule and the bank’s own rewritten guidelines, Zions would give a lot more scrutiny before buying any more structured securities, Arnold said. “We haven’t bought any CDOs really since almost pre-crisis probably, and certainly wouldn’t touch them today,” he said.

Paraphrase: Volcker may have just frozen any future CDO-strucutred issuance in its tracks. Why is this a problem? Because as readers may recall, one of the necessary (if not sufficient) QE exit conditions is not only the return of housing as "high-quality collateral", a status it lost in the crash, but also the associated securitization machinery. Recall from page 30 of the May TBAC presentation appendix:

Simply said: without securitization, banks will have a far more difficult time assisting the Fed in its exit from the bond market (where it is the marginal buyer), which in turns means QE may never be exited period.  Sure, banks may be able to structure housing exposure on a levered basis using some whole loan structuring instrument, however if Collateral Debt, which be definition is pure leverage defined, is not one of the financial tools, kiss the Fed's handover of excess leverage to the private sector goodbye.

Expect to hear much more about this in the coming weeks if even one more bank were to admit that Zions' take on Volcker is indeed accurate, and CDOs - either TruPS of generally - are suddenly non-grata.

We will write more about bank securitized trading book exposures shortly, and just how pervasive of a problem this may become.

In the meantime, a bonus: our 2009 primer on SFAS 115:



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Tue, 12/17/2013 - 09:18 | 4253571 Mae Kadoodie
Mae Kadoodie's picture

There's a market?

Tue, 12/17/2013 - 09:24 | 4253580 SafelyGraze
SafelyGraze's picture

"the Company would no longer have the ability to hold disallowed securities until the anticipated recovery of their amortized cost."

not to worry.

I will be buying them from you and from every other financial institution.

happy xmas!


Tue, 12/17/2013 - 09:42 | 4253629 BandGap
BandGap's picture

Were MBOs packaged and sold to European and Japoanese banks, too? Because this won't be limited to the US shores.

Tue, 12/17/2013 - 09:58 | 4253684 DOT
DOT's picture

Bad assets must be moved to the muppets before they become worthless. There are billions of muppets available in our global economy.


Does "roiling the market" mean the same as "ass raping muppets" and taking a big bonus for it ?

Tue, 12/17/2013 - 10:06 | 4253709 NoDebt
NoDebt's picture

OK, so let me get this straight.  The largest holder (the 800 lb. gorilla) of this small, illiquid CDO market segment comes out and immediately says "we're going over the cliff, boys!" rather than quietly soft-pedal it to prevent a crash in their stock price.  Even thought they don't have to actually divest themselves until mid-2015.

I'm smelling a game being played here.  This is a threat, not them rolling over in submission.

Tue, 12/17/2013 - 10:22 | 4253769 Hedgetard55
Hedgetard55's picture

Any interpretation of Volcker that implies assets must use mark to market rather than fantasy will be rescinded, guaranteed.

Tue, 12/17/2013 - 10:37 | 4253812 hedgeless_horseman
hedgeless_horseman's picture



In Texas, ZION is Amegy Bank. 

Locally, their bankers have been told by senior management, "what the country needs is a few years of 8% inflation," so act accordingly.

Tue, 12/17/2013 - 10:41 | 4253842 all-priced-in
all-priced-in's picture

I hate their ads - they call themselves

The "A" bank - I always think they forgot the hole.



Tue, 12/17/2013 - 10:42 | 4253845 MonsterBox
MonsterBox's picture

Is all this the first step towards a Bail-In?  Banksters are not going to eat these losses all on their own.....

Tue, 12/17/2013 - 10:44 | 4253852 hedgeless_horseman
hedgeless_horseman's picture



Cyprus was not a template.

Cyprus was not a template.

Cyprus was not a template.

Tue, 12/17/2013 - 11:25 | 4253956 Ying-Yang
Ying-Yang's picture

Zions would give a lot more scrutiny before buying any more structured securities, Arnold said. “We haven’t bought any CDOs really since almost pre-crisis probably, and certainly wouldn’t touch them today,” he said.

If you have not bought any since pre-crisis, then you have not bought any in 5 years?

Cry me a river... like banks are going to solve the problems

and 800 lb gorilla has a little over a billion exposure? Does not sound like a big problem against other crap going on.



Tue, 12/17/2013 - 13:12 | 4254352 cro_maat
cro_maat's picture

You forgot to click your heells three times.

Tue, 12/17/2013 - 10:50 | 4253863 Manthong
Manthong's picture

ok.. understood.. but the conundrum is that the "deposit" account is an unsecured loan to the bankster..

so that means they capture your productive work,, hold it hostage to inflation but can steal it with a "buy-in" at a moments notice.

I tinks we oughts to be havin a chat wit them guys. 

Tue, 12/17/2013 - 10:58 | 4253868 hedgeless_horseman
hedgeless_horseman's picture



At least you understand. 

Because I haven't said it here for many months...

Disintermediation, bitchezzz!!!

Tue, 12/17/2013 - 10:58 | 4253887 Manthong
Manthong's picture

:-)    Dudd Fwank 13.3...  says it all.

Tue, 12/17/2013 - 11:12 | 4253915 mess nonster
mess nonster's picture


Tue, 12/17/2013 - 12:36 | 4254151 Manthong
Manthong's picture

..just put a few bucks down on a short Beretta .40.. of course,  .gov does not consider me trustworthy, even though a vet, to take it home the same day although I might or might not have some other stuff that they would be concerned about.

a little heavier than the Glocks, but oh gee, there is something that a real Pietro does that the Austrians don't.


Tue, 12/17/2013 - 20:56 | 4255547 Manthong
Manthong's picture

..taking my little (very petite and pretty hot) sister to the range this weekend to teach her how to use the .380 auto LCP I bought for her.

times like these are when you appreciate the gifts you are given.

Wed, 12/18/2013 - 00:33 | 4256036 Manthong
Manthong's picture

if you do not know dodd frank 13.3..

get edjumicated..

Tue, 12/17/2013 - 11:56 | 4254053 CrazyCooter
CrazyCooter's picture

Well, as I told my old man, "At zero percent interest, anyone that doesn't keep surplus cash in gold or a safe deposit box deserves what they get."



Tue, 12/17/2013 - 11:55 | 4254054 CrazyCooter
CrazyCooter's picture




Tue, 12/17/2013 - 17:35 | 4255140 Manthong
Manthong's picture

geez. cash is crap anymoar.

Wed, 12/18/2013 - 20:27 | 4259191 gallistic
gallistic's picture

And the cheerleading disinfo machine (Reuters) cranks out its latest product-

U.S. finalizes Volcker rule, curbing Wall Street's risky trades

I am so relieved...

Tue, 12/17/2013 - 10:22 | 4253779 ArkansasAngie
ArkansasAngie's picture

Just another way to reduce the number of banks.  Goldman et al are licking their chops.  Brought to you by a FED and CONgress near you.

Tue, 12/17/2013 - 10:53 | 4253825 Manthong
Manthong's picture

good one... 

Tue, 12/17/2013 - 09:57 | 4253679 resurger
resurger's picture

i wont take any "Zion" even for free.

Hope they go fucking bankrupt already.

Tue, 12/17/2013 - 10:02 | 4253698 BigJim
BigJim's picture

Yes, I find it hard to believe our leaders would do anything to harm the interests of any entity that has 'zion' in its name.

Tue, 12/17/2013 - 10:12 | 4253747 SamAdams
SamAdams's picture

it's sort of like naming your bank, "Shysters"....

Tue, 12/17/2013 - 10:23 | 4253774 Hedgetard55
Hedgetard55's picture

That's Mormon Zion, not Jewish Zion.

Tue, 12/17/2013 - 11:11 | 4253922 Uchtdorf
Uchtdorf's picture

Did somebody say 'Mormon?'

So is this like good cop/bad cop?

Tue, 12/17/2013 - 09:25 | 4253582 ghengis86
ghengis86's picture

Lol. There is a market, a meat market. And we're the calves being fattened up on cheap credit and lead to slaughter.

Until these fuckers are in jail or hanging from lamp posts, nothing will change and the giant circle jerk will continue. Fuck all these bankers, and that manbearpig BerYellen too!

Tue, 12/17/2013 - 09:51 | 4253663 Freddie
Freddie's picture

Isn't Volcker's Rule designed to kill smaller or regional banks like Zions?  A rule to help the TBTF big banks?


Tue, 12/17/2013 - 10:16 | 4253759 Bobbyrib
Bobbyrib's picture

You have to pass it to find out what the TBTF lobbyists wrote.

Tue, 12/17/2013 - 10:42 | 4253835 Liquid Courage
Liquid Courage's picture

It's the "Pull My Finger" style of legislation.

Tue, 12/17/2013 - 10:54 | 4253873 BigJim
BigJim's picture

 “There’s a lot of pages,” Goldberg said in an interview. “It’s going to take some time to figure this all out.”

Modern banking - surely the most complex, regulated form of counterfeiting in history.

Tue, 12/17/2013 - 09:33 | 4253585 Popo
Popo's picture

"Under the published rule, the Company would no longer have the ability to hold disallowed securities until the anticipated recovery of their amortized cost. "


Holy shit.  What?   You can hold a security on your books at its ANTICIPATED value???    In that case, I've got $10 BILLION worth of bitcoin, because that's what ANTICIPATE it will be worth in another decade.  Can I please borrow against it?   I'd like to borrow a mere billion in USD from the treasury.   I promise I'll pay you back as soon as my bitcoin hits its anticipated value.  

Good lord there's so much bullshit out there.   How many other banks are using this ridiculous accounting method?   The more you peel away, the more it becomes clear that there are nothing but criminals and fraudsters running the show.

And what do they mean "disallowed" securities?  Does that mean that there are some "allowed" securities that you still *can* hold at their "anticipated" value -- even under the Volcker rule?  Fuck you, Congress.  You are a criminal cartel.  Period.

Tue, 12/17/2013 - 09:48 | 4253646 BandGap
BandGap's picture

Yep. I think it was a wink-wink, nudge-nudge type of thing.

How the fuck did the Volcker Rule get passed? Someone had to know this would result.

Tue, 12/17/2013 - 11:10 | 4253902 Things that go bump
Things that go bump's picture

The thing is 900 pages long and written by lobbyists for the benefit of their employers. I'm sure the good folk in the legislative branch were much too busy to actually read the thing. No doubt the authors gave them a brief synopsis, probably illustrated like a comic, so as not to overtax their limited intellectual capacity or tolerance for tedium. Like the Affordable Care Act, I guess they had to pass it to find out what was in it. Severe intended and unintended consequences are going to be likewise multiple. Vampires are an excellent metaphor for the FIRE industry, just as zombies metaphorically represent the FSA. The rest of us are stuck in a scary place. The suspense is killing me - are we going to sucked dry until we are empty husks or eaten alive? On second thought that's probably not an either/or proposition. We are probably going to be sucked dry and then eaten alive.

Tue, 12/17/2013 - 15:30 | 4254702 post turtle saver
post turtle saver's picture

long wooden stakes, head shot training, and cardio

Tue, 12/17/2013 - 11:10 | 4253910 hedgeless_horseman
hedgeless_horseman's picture



How the fuck did the Volcker Rule get passed? Someone had to know this would result.

Does BofA CEO, Brian Moynihan, look worried to you?

Fear not.  His magical asset-pricing powers and unicorn, Fasbee, are as strong as ever.

Tue, 12/17/2013 - 09:54 | 4253674 resurger
resurger's picture

Fuck you!

i too want to mark my books to rainbows and unicorns

Tue, 12/17/2013 - 10:21 | 4253773 astoriajoe
astoriajoe's picture

What's the present value of a unicorn skittle shitted 10 years from now?

Tue, 12/17/2013 - 10:41 | 4253834 noless
noless's picture

Whatever the fuck you can get people to believe.

Tue, 12/17/2013 - 10:08 | 4253722 NoDebt
NoDebt's picture

Remember in 2009 when they suspended "Mark to Market" accounting?  This is it.

Tue, 12/17/2013 - 10:58 | 4253879 Oldwood
Oldwood's picture

Yes they suspended it after they enforced it, taking out a bunch of banks that mysteriously ended up being absorbed by more "favored" institutions.

Tue, 12/17/2013 - 12:39 | 4254210 donsluck
donsluck's picture

One sign of despotism, capricious law enforcement.

Tue, 12/17/2013 - 10:20 | 4253764 Bobbyrib
Bobbyrib's picture

"Holy shit.  What?   You can hold a security on your books at its ANTICIPATED value???    In that case, I've got $10 BILLION worth of bitcoin, because that's what ANTICIPATE it will be worth in another decade.  Can I please borrow against it?   I'd like to borrow a mere billion in USD from the treasury.   I promise I'll pay you back as soon as my bitcoin hits its anticipated value."


Dude, our whole economy has been based on Enron accounting standards (mark to fantasy) since the 2007 financial crisis.

Tue, 12/17/2013 - 10:19 | 4253765 Beatscape
Beatscape's picture

Funny how the term Moral Hazard has kinda been dropped from the media lexicon.

Tue, 12/17/2013 - 12:40 | 4254217 donsluck
donsluck's picture

That's because the hazard is now real. We are now in immoral land.

Tue, 12/17/2013 - 10:36 | 4253822 Bangin7GramRocks
Bangin7GramRocks's picture

Banking in 2013. I anticipate that the garbage on our balance sheet will be worth $20 billion more than 2012, so we will distribute $10 billion of these anticipated earnings to our esteemed employees immediately.

Tue, 12/17/2013 - 11:04 | 4253909 nabi
nabi's picture

Banking in 2013. I anticipate that the garbage on our balance sheet will be worth $20 billion more than 2012, so we will distribute $10 billion of these anticipated earnings to our esteemed SENIOR MANAGEMENT TEAM immediately.

There, fixed that for you...

Tue, 12/17/2013 - 10:42 | 4253849 MsCreant
MsCreant's picture

Popo, friend, oh wow! We need to talk.

You have just noticed the rabbit hole goes a little deeper than you thought. No need of a conspiracy theory to see this criminal activity for what it is.

You know the Treasury is issuing bonds that the Fed is buying, essentially printing money out of thin air, right? You get what that really means about the US e-con-omy right? That is what is holding up the economy, keeping it from toppling over. And instead of using this time to get their crap in order and, you know, let deflation happen or something, they are scooping up all the money and begging for more. They don't see it as a crisis that the printing would give us a break from, no, they see it as a reason to rape and pillage.

You know about currency swaps that happen between different countries, right? When one currency gets really fucked up, others will buy it to keep it's value from going totally into the toilet. Plus the money that the Fed is so called loaning/printing is propping up the world economy by propping up corporations. 

For me, once you know these things, you realize that they can and will do anything. Anything. What is to stop them? The best anyone can do is detective work (like ZH does) to notice the small wakes left in the system by all these secret little mechanations and guess precisely what theft or deception they did this week to keep it propped up.

When you get it in your guts, bones, and heart that they are all criminals, real criminals, only then can you start to find a space that looks like a chance at freedom. 

If you knew all this already, I apologize. I remember my own shock at some things when I was learning them and you looked like you were doing something I could relate to-- being dismayed.

Tue, 12/17/2013 - 11:10 | 4253907 BigJim
BigJim's picture

Yes, indeed. People scoff at the idea of a coming 'New World Order', and look very disbelieving when I tell them it's already here. I point out the degree to which (supposedly sovereign) countries' central banks all act in coordination and help each other out, and they will usually say - after a pause for thought - that it's a good thing they're all cooperating to ensure the financial system's stability.

'Financial system stability' is the euphemism de jour for enabling the rich to get bailed out when their bets go wrong, of course.
PS - I just love what this tells us about the monetary system:

Private sector generation of moneylike collateral helps policymakers over long periods by:

  • Slowly reducing the demand for money
  • Increasing financial deepening
  • Supporting financial globalization

The more restricted the private sector’s ability to create safe, liquid, and moneylike collateral, the harder the public sector must work to supply it through deficits and easy monetary policy.

PPS - I know I shouldn't regard you as some kind of spokesman for your gender, but do you know why so few women are interested in this stuff? It's ironic, really; so many women spend so long messing around with their hair or shoes trying to be attractive to men, but if they spent even a tenth of that time reading stuff like Zerohedge I think they'd be way ahead of the competition in this regard.


Tue, 12/17/2013 - 12:27 | 4254105 Things that go bump
Things that go bump's picture

Do you love to shop? Though you didn't ask me, I'll put my oar in here. No matter what they say about equality of the sexes, being equal doesn't mean identical. Women's brains just aren't wired like men's. I think people evolved to function best in a pair, ideally with each partner complementing the other's strengths and weaknesses, at least to some degree. My mother always said that she and my father together pretty much made a whole person. Just as many guys would rather have a root canal than say go shopping or have lengthy phone conversations, many of the things you guys find intensely interesting, such as sports, many women find tedius and boring. That isn't to say there isn't a lot of overlap, but lots of women aren't interested in where money comes from or how it works as long as they have some. Men have always been the hunter part of hunter/gatherers. Not so very long ago, when a man passed one of the greatest tributes to the deceased would be to acknowledge that he was a good provider. 

Tue, 12/17/2013 - 12:47 | 4254249 donsluck
donsluck's picture

While a in a fetus stage, the male induces the production of testosterone. One affect is the destruction of millions of "female" brain cells (those responsible for compassion, affection, etc). These are then replaced by "male" brain cells (those responsible for agression, focus, etc). We all start out as females. Becoming male is a struggle.

Tue, 12/17/2013 - 12:35 | 4254189 MsCreant
MsCreant's picture

I fuss with my hair a little, no color or perms, but enough to look put together when I want to be. Nails are short, too much work, not practical to do otherwise. I like to look good so some effort does go there. It is my socialization and also it maximizes the resources I have access to. 

I hear you on wasted effort going into external appearances vs. having something going on. Women are told daily if not hourly that is what their value is, their attractiveness. Something so shaky to base your self concept on is going to yield some very insecure behavior. It is a cultural problem, I do not fault women for it, I am a bit of a victim of it myself, I can always find flaws, I am never good enough. But all the emphasis on hair, clothes, nail, is desperation because, somewhere in our souls, we know this shit is empty. That can make you scared, and then you stick your head in the sand and double down on the bullshit.

I think I am lucky, my grandmother survived the depression and she was divorced, ended up with my mother (disabled) and me to take care of in her old age. She was self sufficient and frugal. Some of that rubbed off on me. I was not interested in finance until I discovered the concept of peak oil in late 2004. My mind was blown. That led me to look more deeply into car culture, the urbanization process, which led to housing and then, the motherfuckin' bad boy of them all, the econony. Once I was at the economy, I branched out into the other topics like pharmaceuticals, food, MIC, and more. It explains so much. It's funny, in one way I came full circle back to Karl Marx who said that the distribution of resources determines ideology. I reject communism, but see that much of his social psychology about people and markets is dead on correct. 

I have rambled on too long representing my gender. I think someone who thinks for themselves is someone who can be a real partner. Women are socialized to look for a guy to take care of them. On the flip, men are socialized to look for someone to take care of, who will then take care of them. That is a shaky arrangement. If a man and woman are genuine partners, together because they are not dependant, but teammates who each bring something to each others' lives, and the sum of them is greater than them alone, you got a good thing going. Men resent having all the pressure on them to be the breadwinners, yet they are stuck with it or they are not a "man" and that is not fair. I am the one who does this economy stuff, but my husband understands it and trusts my judgement. We are a team. He likes the results of my interest in it, though it does take me away from him at times and he does not like that. 

God I have rambled. The take away is that the woman should not read ZH to attract men. She should read ZH so she will know how to take care of herself. Organically, out of that process, she will attract a guy like you without trying. 


Tue, 12/17/2013 - 12:52 | 4254266 donsluck
donsluck's picture

We take care of each other. Men are stronger and take more risk. Women are more cautious and nurturing. The reason for all this is successful reproduction, which is the only thing evolution "cares" about. Evolution is god. God doesn't care.

Tue, 12/17/2013 - 13:07 | 4254325 Things that go bump
Things that go bump's picture

I agree with a lot of what you say about the way women measure their self worth, but anyone can see the advantage personal beauty bestows on a woman, and while smart lasts longer, beauty seems to last long enough to be the greater advantage, at least for girls in the lower social classes. When I was young, what I really wanted was to be drop-dead gorgeous rather than only average in appearance. God, in his wisdom made me smart instead, but I found that to be of little value at the time. 

Tue, 12/17/2013 - 12:34 | 4254190 MsCreant
MsCreant's picture

Ramble, ramble.

Tue, 12/17/2013 - 14:25 | 4254561 BigJim
BigJim's picture

Interesting, thanks for the replies.

I often scoff at feminists who say that women are held up to an impossible standard to aspire to; my rebuttal is that, in addition to being good looking, men's role models are fit, brave, financially successful, funny... but actually, that's good, because if people are working towards becoming their role models, at least the male's struggles - though ultimately more demanding - will result in more personal growth.

Tue, 12/17/2013 - 11:29 | 4253968 Ban KKiller
Ban KKiller's picture

Market? For the current market to work you must have crooked accountants. What happened to the big eight accounting firms? Got caught...lying. Wall Street is not rigged...ha ha ha..

Tue, 12/17/2013 - 09:22 | 4253575 Oldballplayer
Oldballplayer's picture

Christ, I am now going to have to spend an hour figuring out what this all means.

Tue, 12/17/2013 - 09:41 | 4253620 BandGap
BandGap's picture

I think it means banks have to cover their asses when it comes to risky investjments like MBOs.

Tue, 12/17/2013 - 10:38 | 4253827 NoDebt
NoDebt's picture

It means that the ghosts of 2008-2009 are "blobbing up" again.  Don't worry.  They'll hammer 'em back down again.

Tue, 12/17/2013 - 11:02 | 4253897 BurningFuld
BurningFuld's picture

This is all pretty simple.

Banker: "Ya we are just going to fuck with our balance sheet until we have burned through all of our depositors cash at which point we will be rich and our depositors not so much."

You: "Then what?"

Banker: "Start up another Bank..duh!"

Tue, 12/17/2013 - 09:50 | 4253660 101 years and c...
101 years and counting's picture

it means the Fed will be able to do MOAR sooner rather than later. 

Tue, 12/17/2013 - 10:51 | 4253870 MonsterBox
MonsterBox's picture

Think all you want, OBP, just don't remove your money from your "secure" savings, 401k, etc.  The bankster's balance sheets may have need for your generous "shareholder" donation.

Tue, 12/17/2013 - 09:23 | 4253584 Loanman26
Loanman26's picture

Good night Irene,

Good morning Loretta.

Tue, 12/17/2013 - 09:26 | 4253586 XAU XAG
XAU XAG's picture

Rule Makers


Shooting themselves in the foot..............again

Tue, 12/17/2013 - 10:24 | 4253780 Bobbyrib
Bobbyrib's picture

They will never allow that to happen. It's an ever expanding pile of bullshit until the collapse.

Tue, 12/17/2013 - 09:26 | 4253587 Sequitur
Sequitur's picture

"Not a problem. Just tell investors the balance sheet got 'vaporized.'"

- Jon Corzine

Tue, 12/17/2013 - 09:30 | 4253596 fonzannoon
fonzannoon's picture


The assets must be divested by July 21, 2015, unless regulators grant a two-year extension, Zions said.


move along.....

Tue, 12/17/2013 - 09:52 | 4253669 dick cheneys ghost
dick cheneys ghost's picture

Why would the banksters do this to themselves? It's obvious that they wrote the rules...........


Tue, 12/17/2013 - 10:00 | 4253696 fonzannoon
fonzannoon's picture

Do what? What are they doing? Nothing, that's what they are doing. this is another nothing burger

Tue, 12/17/2013 - 09:28 | 4253591 Herdee
Herdee's picture

More QE through 2015 with the hope that even more will work?Bring in more super liquidity and dump garbage gradually into a high market?Let the water out of the tub a little at a time in hopes that Zion will be ahead of the pack?I see everybody else saying,"I'm dumping all the garbage before you."GET OUT!

Tue, 12/17/2013 - 09:59 | 4253686 SheepDog-One
SheepDog-One's picture

I hope that's the case! I don't know though, all I see are the gullible sheep saying everything is just great.

Tue, 12/17/2013 - 10:09 | 4253732 CH1
CH1's picture

all I see are the gullible sheep saying everything is just great.

For many of them, it's a desperate prayer that they won't have to face what's coming.

Tue, 12/17/2013 - 09:29 | 4253592 BadDog
BadDog's picture

To all you checking account and passbook savers out there, we're glad to have you aboard as our new shareholders.  You will be receiving vital information on your new equity positions in the near future.

Tue, 12/17/2013 - 09:50 | 4253652 jcaz
jcaz's picture

Bingo-  the only way for this to work out is to lay it off on their depositors via an "IPO"-  "Hey grandma, good news- you get stock instead of a CD, cause it's way better!"

Exactly what the 1000 pages of obfuscation is about- how to lay it off onto the dupes.....

Tue, 12/17/2013 - 09:58 | 4253691 SheepDog-One
SheepDog-One's picture

Yep, the handoff to retail happening. I can't say I feel sorry for them at all.

Tue, 12/17/2013 - 09:29 | 4253598 Rodders75
Rodders75's picture

Exactly what UBS were banging about a few weeks ago - QE infinity because banks fucked by regulation. Then get v bullish on gold.

Tue, 12/17/2013 - 09:37 | 4253608 ToNYC
ToNYC's picture

Reality is that which you can spend, not think. In FED Gstaad it cost $5,000, but in Philadelphia, it's $50 dollars.

Tue, 12/17/2013 - 10:41 | 4253840 NoDebt
NoDebt's picture

"How much for the gun?"

Tue, 12/17/2013 - 09:45 | 4253610 Mercury
Mercury's picture

Paraphrase: Volcker may have just frozen any future CDO-strucutred issuance in its tracks. Why is this a problem? Because as readers may recall, one of the necessary (if not sufficient) QE exit conditions is not only the return of housing as "high-quality collateral", a status it lost in the crash, but also the associated securitization machinery.

And there's the quarry for the next leg of QE...

Tue, 12/17/2013 - 10:00 | 4253690 dick cheneys ghost
dick cheneys ghost's picture

I assumed (wrongly) that they stopped making these CDO's and such after the crash........

Tue, 12/17/2013 - 10:33 | 4253809 dick cheneys ghost
dick cheneys ghost's picture

well, at least I can tell the kids that we still manufacture things in this great country, things like..........






license plate readers


what a country!!

Tue, 12/17/2013 - 12:35 | 4254202 tradewithdave
tradewithdave's picture

Do haircuts count... you know, a Bart mullet? Scissors as Marx' means of production.

Tue, 12/17/2013 - 09:38 | 4253613 resurger
resurger's picture

MTM instead of HTM!


Tue, 12/17/2013 - 09:37 | 4253616 rsnoble
rsnoble's picture

What's roil the markets considered these days?  Down 50pts one day and 25 the next followed by a 300+ friday?  These market eats everything in it's path.  About time to have a heart attack but who knows.

Tue, 12/17/2013 - 09:50 | 4253623 virgilcaine
virgilcaine's picture

30 pgs of clearly written laws in Glass Steagel or 1000 pgs BS in Volker rule.  Until the Big Box Financial Firms are broken up its all BS!!

VC's rule your too big to Exist.

Tue, 12/17/2013 - 12:55 | 4254286 donsluck
donsluck's picture

Kinda like the failed EU Constitutiion. In the US it's a few pages, for the EU it was thousands. It was voted down. Bless the French.

Tue, 12/17/2013 - 09:44 | 4253636 youngman
youngman's picture

How they can hold this crap at a high value just to fool the regulators and investors.....two sets of books for sure.....and big bonuses this year as we might not be around next love the way the USA does business now....

Tue, 12/17/2013 - 09:46 | 4253639 New American Re...
New American Revolution's picture

REFORMATION AND RENAISSANCE OF AMERICA: Packaged bankruptcies for everyone of the 2B2Fail Banks; allowing a wash out of all derivatives to zero by matching'em up; shadow banking will be a mess of counter claims for a dwindling asset base; complete collapse of the world financial markets; stop and reset the US government and its agencies (most of which are dissolved); Restart the Renaissance of America.

Tue, 12/17/2013 - 09:47 | 4253640 Whoa Dammit
Whoa Dammit's picture

The banks fucked themselves years ago. And they still expect handouts. The question is now becoming "Can the American people continue to pay for the malinvestments of its bankers?".

Tue, 12/17/2013 - 09:47 | 4253641 Beatscape
Beatscape's picture

Is this the end of extend and pretend?

Tue, 12/17/2013 - 09:48 | 4253645 eddiebe
eddiebe's picture

I thought banks just marked to model anyway, so what's the fuss?

Tue, 12/17/2013 - 09:47 | 4253649 DOT
DOT's picture

No fucking way this bank can fairly be called a "Victim".

Tue, 12/17/2013 - 09:50 | 4253654 rpboxster
rpboxster's picture

Zion needs better lawyers and lobbyists.  You won't see this type of note from any TBTF unless it's to pressure for delay or reversal of these requirements.

Tue, 12/17/2013 - 09:53 | 4253668 SheepDog-One
SheepDog-One's picture

'It's gonna take a long time to sort all this out' says the bankster....oh fucking bullshit! YOU guys WROTE IT!

Tue, 12/17/2013 - 09:54 | 4253672 esum
esum's picture

Volker rule and other gubmint fixes.... designed to benefit the big banks tbtf.... at taxpayer expense Of course the smaller / regional / local banks bring some benefit to the individuals / communities but that doesn't matter anymore... 

Volker doesn't even want his name associated with the Volker rule... that tells you something right there... where are Dodd and Frank these days... 


Tue, 12/17/2013 - 09:56 | 4253682 buzzsaw99
buzzsaw99's picture

i hate it when they read gobble dee gook while they fuck me


Tue, 12/17/2013 - 09:56 | 4253683 Skin666
Skin666's picture

Brilliant yet again Tyler(s)!


I've got a feeling page views on Zero Hedge are going higher in the New Year ; )



Tue, 12/17/2013 - 10:01 | 4253694 Miss Expectations
Miss Expectations's picture

The final rule requires banking entities to divest such assets by July 21, 2015, unless, upon application, the Federal Reserve grants extensions to July 21, 2017.

"Give me control of a Nation's money and I care not who makes the laws."

We are no longer a nation of laws, but of rules controlled by the rule makers, rule changers and Executive Order writers (i.e., Obama Care, EPA, FERPA)

Ergo the new control mechanism can be summed up thusly:

"Give me control of the Nation's rules and I care not who makes the laws." 

Tue, 12/17/2013 - 10:32 | 4253796 dick cheneys ghost
dick cheneys ghost's picture



"Give me control of the Nation's rules and I care not who makes the laws."

I beleive it was a Cuban guy who said that...........


Tue, 12/17/2013 - 10:04 | 4253707 BrigstockBoy
BrigstockBoy's picture

Their filing cites trust preferred securities, the biggest boondoggle ever allowed by the Fed. A "hybrid" debt/equity instrument that qualified as tier one capital for issuer but is nothing more than debt. The shit was packaged up in CDOs and sliced and diced so that junk would carry "investment grade" ratings. Bank holding companies bought the securities. Big ponzi.

Imagine if you would BHC A issues $10 million in TruPS and sells it to BHC B. But BHC B issues $10 million and sells it to BHC A. Both get capital treatment for their $10 million even though nothing more than debt was created. And when the shit hit the fan, BHCs were allowed to pretend securities weren't impaired. If I'm not mistaken, both Fed and FHLBs would even advance on the shit.

Tue, 12/17/2013 - 10:09 | 4253734 JmanSilver.Gold
JmanSilver.Gold's picture

yup, you got it.  The FRAUD will play the ponzi until its forced to do anything else.  Oh, I mean the FED !  Sorry.

Tue, 12/17/2013 - 10:09 | 4253727 JmanSilver.Gold
JmanSilver.Gold's picture

LMAO please Zions.   "Roil the market" my fuckin ass.  If you guys think that this will be the beginning of the end to MARK TO UNICORN valuation/accounting, think again.

If necessary, a little IRS/SEC exemption will be thrown their way, to ensure 'market steeebelity'.

Tue, 12/17/2013 - 10:12 | 4253744 pndr4495
pndr4495's picture

Hmmmmm Questionable IOUs disguised as assets. My immediate question is where is the current bid? The bottom line on value is that it is wherever the current best bid is , period.  Sort of why open air, physical marketplaces exist(ed) - so that when there is a commotion around a sellers booth others can see what caused it and maybe improve the bid. Good luck with all the supposed technological innovation that veils and scares real buying and selling interest on the machines. Trust preferred CDOs- that's laughable, what trust? Between what parties?  What exists now is NOT innovation. Maybe Zions Bank should eat the losses like the MEN in the trading rings did every day of their workweek when they had them. Doubtful that they will however. The PHD or MBA who figures out how and to whom to peddle this shit will be rewarded NO DOUBT there.

Tue, 12/17/2013 - 10:25 | 4253785 bourbondave
bourbondave's picture

While what you say is true, haven't our glorious leaders now figured out a way to force the worst of all worlds?  So in this case, the bank is forced not just to recognize the MV of these depressed assets, but to physically sell them.  At least in real MTM reporting, they would report the MV drop and then if things materialize in the future as they hope, they would report the MV gain as these assets actually pay (if they pay).  These rules force selling which is as usual, the govt forcing the worst of all situations.

Tue, 12/17/2013 - 13:07 | 4254334 donsluck
donsluck's picture

On the surface you seem correct, but you fail to account for the fact that the TBTF banks WROTE  the law. The hidden agenda is bail-ins (from the wealthy >$100,000 depositors).

Tue, 12/17/2013 - 10:14 | 4253745 bearish1
bearish1's picture

Anything to do with the banksters is intentional.....and in their favor.


Tue, 12/17/2013 - 10:21 | 4253778 Beatscape
Beatscape's picture

What is a "disallowed security"?

Tue, 12/17/2013 - 10:29 | 4253790 moneybots
moneybots's picture

"As First Volcker Rule Victim Emerges, Implications Could "Roil The Market" "


Doesn't sound like a victim of the Volker Rule.  sounds like exposure of fraud that has been going on since 2009, when FASB was told to allow banks to LIE ABOUT THE VALUE OF ASSETS.

Tue, 12/17/2013 - 11:08 | 4253916 BoxDownbytheRiviera
BoxDownbytheRiviera's picture

Once upon a time in the land of the all you can eat, guys who invented the off balance sheet went to jail.  I now believe they should be pardoned and given the medal of freedom for their revolutionary innovations.





donations in care of Zerohedge.  Paypal and bitcoins accepted.

Tue, 12/17/2013 - 10:29 | 4253795 Abrick
Abrick's picture

Imagine if homeowners back in 2008 would have been able to hold their homes until the anticipated recovery of their amortized cost was realized. The game isn't rigged at at all. Zions Bancorporation, are you kidding me? You couldn't make this stuff up.

Tue, 12/17/2013 - 13:11 | 4254339 donsluck
donsluck's picture

To state the obvious, the issue was the loan, not the house.

Tue, 12/17/2013 - 13:43 | 4254437 Abrick
Abrick's picture

To state the obvious one person's loan is another persons asset. Value is determined by who's interest is being enforced.

Tue, 12/17/2013 - 10:32 | 4253807 moneybots
moneybots's picture

"Simply said: without securitization, banks will have a far more difficult time assisting the Fed in its exit from the bond market (where it is the marginal buyer), which in turns means QE may never be exited period. "


That which can't go on forever, won't.  QE can't go on forever, any more than the Weimar hyperinflation could.

Tue, 12/17/2013 - 10:33 | 4253808 youngman
youngman's picture

They could sell them to the Detroit Pension funds...jus sayin

Tue, 12/17/2013 - 11:02 | 4253899 ThisIsBob
ThisIsBob's picture

Or to mayors of small Norwegian towns.

Tue, 12/17/2013 - 10:33 | 4253811 vote_libertaria...
vote_libertarian_party's picture

So they are selling because banks won't be able to hold these anynore?


Don't banks own 99.9% of these?  Who they going to sell to?


Ohhhhhhh....I see.....the Fed is going to switch from MBS\Treasuries to off balance sheet CDO's???


Whew...ok, everything is fixed.  No need to panic.

Tue, 12/17/2013 - 10:34 | 4253816 nostromo17
nostromo17's picture

A lotta stuff is "held to maturity" mostly underwater trades.....OY. -Maybe the new rules have a bit more bite than apparent at first glance. -What about all the mortgages being kept "in the drawer?"

Tue, 12/17/2013 - 10:42 | 4253844 moneybots
moneybots's picture

" All banks may not interpret the Volcker Rule the same way, according to Jason Goldberg, an analyst at Barclays Plc.

 “There’s a lot of pages,” Goldberg said in an interview. “It’s going to take some time to figure this all out.” "


Then you have the rest of Dodd Frank, which is a lot of pages to figure out.

Glass Steagall was so much simpler.  The bankers shouldn't have tried to get rid of it.  As they say, be careful what you wish for.

Tue, 12/17/2013 - 10:44 | 4253854 rwe2late
rwe2late's picture


does this mean that (with extensions),

the US officially may have at least until 2017 to selectively QE bailout (purchase the currently allowed securities) from the TBTFs,

when those securities are scheduled to be officially disallowed,

and all the while any of the smaller non-TBTFs can fail unless rescued, possibly by a TBTF takeover (of any good assets)

coupled no doubt with a government takeover of all ephemeral assets


Tue, 12/17/2013 - 18:54 | 4255316 RMolineaux
RMolineaux's picture

Yes, the Fed will buy at par just before the banks would have to shift to "available for sale."   Then the Fed takes the loss and reduces its payments to the Treasury.  Neat maneuver, guys! the Fed not subject to FSB 115?

Tue, 12/17/2013 - 10:47 | 4253859 virgilcaine
virgilcaine's picture

Small to Midsize Banks fail every week. All they are concerned about are the too Big Too Exist NY Banks. The Fed are eating its own.


Tue, 12/17/2013 - 10:49 | 4253862 starman
starman's picture

Thus making most of the small to medium banks a very scary place to bank with! Can anybody hear me? Can you understand me?

Tue, 12/17/2013 - 11:00 | 4253886 Catullus
Catullus's picture

Surely someone will buy these things. I would. At like .30

Tue, 12/17/2013 - 11:20 | 4253926 csmith
csmith's picture

The end of the "pretend" portion of extend and pretend.

BTW, all banks with any sense wrote down/sold TRUPs a long time ago.

Tue, 12/17/2013 - 11:26 | 4253958 joeknows
joeknows's picture

Yay! no more funny accounting.  mark to market lets us know what the assets on the balance sheet is worth without banks pretending the value hasn't dropped by 50%.  This will force them to finally forclose on properties that are delinquent and force them to sell properties that are vacant.  The first step in finding a real market price for housing.

Tue, 12/17/2013 - 13:15 | 4254355 donsluck
donsluck's picture

Sorry, but CDOs are not MBSs. This will make the TBTF banks hold onto their illusions more tightly. You can't say "yay" until the FED is dissolved.

Tue, 12/17/2013 - 11:47 | 4254023 raeb
raeb's picture

In the meantime, gold is getting hammered...    In a make believe world, who needs the real thing?

Tue, 12/17/2013 - 12:22 | 4254143 tradewithdave
tradewithdave's picture

"No one move or the bunny gets it."

Tue, 12/17/2013 - 12:30 | 4254167 ToNYC
ToNYC's picture

It's missing something. In 2015 it will taste good. Make your reservation today; don't miss out on the savory MBSs to come.... in the kingdom come.

Tue, 12/17/2013 - 13:05 | 4254322 conspicio
conspicio's picture

Is this the bank that will fuck the Fed and topple the first domino? My goodness, those tricksy Mormon puppets on the Board are heading off script.

I wonder if they are still laundering money for the Mexican drug cartels? Or did that smallish $7M fine cure them of that? Yeaaahhh, right...

When you see Zion's, you should see also of The Commerce Bank of Washington, The Commerce Bank of Oregon, Nevada State Bank, California Bank & Trust, National Bank of Arizona, Vectra Bank of Colorado, Amegy Bank of Texas, Nevada State Bank Public Finance, & KNN Public Finance. S&P500 member and NASDAQ Financial 100 member.

Pass the popcorn, this is going to get interesting.

Tue, 12/17/2013 - 14:22 | 4254555 MeelionDollerBogus
MeelionDollerBogus's picture

wait, we CAN'T print moar welfs?


Tue, 12/17/2013 - 18:42 | 4255294 RMolineaux
RMolineaux's picture

(Sarcasm)  How did banks ever survive before mortgages were securitized?

Tue, 12/17/2013 - 18:53 | 4255311 Watson
Watson's picture

If this means more outfits mark-to-market then it is a good thing.

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