The American Bankers Association announced Wednesday that it will drop its request for emergency relief in pending litigation over the Volcker Rule, but declined to stop the suit entirely.

The trade group sued the banking agencies late last year, arguing the rule would cause "immediate and irreparable" damage to community banks because it unexpectedly covered certain collateralized debt obligations backed by trust preferred securities. The trade group sought an emergency court action, warning that banks would have to take massive write-downs if the provision of the rule were allowed to stand.

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