Dodd Frank Act Reforms: Trust Preferred Securities No Longer Tier 1 Capital

Trust preferred securities (TPS), a financial innovation of the 1980s, are long-term hybrid securities with features of both equity and debt. The Federal Reserve System allowed TPS to be treated as Tier 1 capital for bank holding companies (BHCs) in 1996. The definition of TPS in regulatory capital has been revised over the years with the most recent revisions occurring in 2005.