WASHINGTON ? The Federal Reserve and other bank regulators announced Friday they will give the public an extra month to comment on a proposed regulation aimed at limiting the kind of risky trading that made the 2008 financial crisis worse.
The proposed rule, named for former Federal Reserve Chairman Paul Volcker, has triggered opposition by financial service firms who say the draft measure is confusing and will be hard to implement.
The rule is part of a sweeping overhaul of financial regulations passed by Congress in 2010. It is aimed at prohibiting banks from trading in stocks, bonds or derivatives that they own. They will only be able to trade on behalf of clients. The Volcker Rule is expected to take effect by July. Banks would have until July 2014 to comply.
Many financial firms made big bets on bonds backed by mortgages and ended up losing billions of dollars when the financial crisis hit. The government had to step in and bail out some of the institutions.
In a joint statement, the Federal Reserve, the Securities and Exchange Commission, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency said the public will now have until Feb. 13 to file comments.
The agencies had issued the proposed rule for comment in October and originally said the comment period would close on Jan. 13.
Financial service companies and a number of Republican lawmakers had sought a longer comment period for the proposal, which would implement one of the most controversial sections of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Rep. Randy Neugebauer, R-Texas, the head of a House Financial Services oversight subcommittee, had released a letter this week signed by 121 lawmakers seeking a longer comment period. The lawmakers also asked the agencies to scrap the current proposed regulation and draft a new rule.
Scott Talbott, a senior vice president of government affairs for the Financial Services Roundtable, one of the industry's top lobbying groups, said his group welcomed the longer comment period.
"Given the complexities of the proposed rule and the impact on the markets, we appreciate the additional time," he said in a statement.
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