Volcker joins comment frenzy over his financial rule

"The continuing explicit and implicit support by the federal government ... can be justified only to the extent those institutions provide essential financial services," he wrote. "Proprietary trading ... does not justify the taxpayer subsidy."

Volcker acknowledged that regulators have a substantial challenge in implementing the rule, and is not made easier by the complexity of the nation's largest financial institutions most affected by the rule. But he also said the doom and gloom proffered by many of those institutions in response to the rule is overblown, and that only a handful of banks will feel a real pinch from the new requirements.

Volcker's letter was one of a torrent of opinions dumped on regulators Monday, as the deadline arrived for public comments on the rule. Groups and individuals from all sides of the spectrum inundated regulators with letters, with many running hundreds of pages. Regulators heard from business groups pushing a go-easy approach, as well as market reform advocates calling for tight restrictions.

A coalition of industry groups, including the Securities Industry and Financial Markets Association (SIFMA) and the Financial Services Roundtable, sent in multiple letters to regulators, airing a litany of concerns and pushing regulators to rethink a number of proposals.

"The potential costs to financial markets, investors and corporate issuers from incorrectly implementing the Volcker Rule are enormous," wrote the groups.

Financial reform advocacy group Better Markets took the other side of the argument, saying regulators need to make sure banks don't get to make risky trades while enjoying taxpayer backing.

"The argument for the Volcker Rule is obvious — we shouldn't allow risky bets that pay enormous bonuses to bankers if they work, but stick taxpayers with the bill if they fail. That's not capitalism; that's basically a subsidized trip to the blackjack tables," said Dennis Kelleher, the president and CEO of the group.

Also getting into the fight were lawmakers from both parties. Sens. Carl Levin (D-Mich.) and Jeff Merkley (D-Ore.), who authored the original position, sent their own missive to regulators calling on them to strengthen their proposed rule.

"The final rule needs to draw brighter lines, remove unnecessary complexities, and enable cost-effective, consistent enforcement," they wrote.

Meanwhile, Sen. Bob Corker (R-Tenn.), who sits on the Senate Banking Committee, offered his own take on the rule, calling on regulators to ensure whatever rule they produce does not needlessly handcuff financial markets.

The nation's financial regulators released a proposal implementing the provision back in October, which ran nearly 300 pages and asked for public input on more than 1,000 questions.

Regulators now will have roughly five months to digest those comments and come up with a final proposal before the provision is set to take effect on July 21.