One important way that banks reassure regulators about the strength of their financial institutions is by holding sufficient amounts of so-called “Tier 1” capital. So, when the new Dodd-Frank Act said bank-issued trust preferred securities could no longer be counted as Tier 1 capital, those securities suddenly became a lot less valuable. Wells Fargo responded to the new law by exercising its right to early redemption of the securities—a move that drew lawsuits from holders of those securities, who had expected a longer maturity. Plaintiffs’ attorneys alleged that the earlier redemption resulted in damages of more than $196 million—the amount of interest the outstanding units would have paid had Wells Fargo waited until later optional redemption dates. Ultimately, U.S. District Judge Claudia Wilken agreed with Pillsbury’s argument that a capital treatment event occurred when President Obama signed the Dodd-Frank Act on July 21, 2010, triggering Wells Fargo’s contractual right to redeem the securities after that date. With the complaints dismissed, this was the first test of the impact of Dodd-Frank on bank capital treatment, with Pillsbury’s victory setting an important precedent.