By Erik Wasson - 12/23/11 08:22 PM EST
Financial regulators on Friday bowed to pressure from congressional Republicans and business groups to extend a comment period on the controversial banking regulation known as the Volcker Rule.
The Jan. 30 deadline for comments on the rule, which was released in October, will be extended by 30 days.
The Federal Reserve, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and Securities and Exchange Commission (SEC) are involved in coming up with the rule, and approved the extension.
The provision of the Dodd-Frank financial reform law, named after former Fed Chairman Paul Volcker, prohibits banks from trading for their own profit and not at the behest of clients, known as proprietary trading.
It also limits banks' relationships with hedge funds and private equity funds in an attempt to isolate them from riskier parts of the financial market. Originally a three-page proposal, the draft ballooned to 300 pages, in part due to intense lobbying by banks.
Two SEC commissioners said the comment period on the rule should be extended further.
SEC Commissioners Daniel Gallagher and Troy Paredes said “the 30-day comment period extension is insufficient given the complexities of the Volcker Rule proposal.”
In a letter sent to regulators charged with writing the rule, top Republicans on the House Financial Services Committee called for the delay this month. The U.S. Chamber of Commerce has called for a six-month comment period.
Peter Schroeder contributed.