Regulators: Banks need not play by 'Volcker Rule' until mid-2014

The announcement marks the latest turn in what has been one of the most contentious fights surrounding the financial overhaul. The provision is aimed at preventing banks that enjoy a government backstop from making risky trades in the hunt of profits. A number of regulators have been tapped with coming up with a joint rule implementing the ban on "proprietary trading," but have their hands full.

The financial industry is fiercely opposed to any strict implementation, arguing that a harsh ban could prevent legitimate trading needed to keep markets flowing.

In an attempt to turn the idea into a reality, regulators have put together a lengthy proposed rule that still asks hundreds of questions of the public, leading to complaints from both detractors and proponents of the rule that its implementation has become far too complex.

Regulators are currently trying to digest thousands of comment letters, some spanning hundreds of pages, that they have received from various stakeholders on the original proposal. And already, some have already informed Congress that it is looking unlikely they will have a final rule in place by the time the ban is supposed to take effect on July 21.

Both Federal Reserve Chairman Ben Bernanke and Securities and Exchange Chairman Mary Schapiro have testified before Congress that the July deadline looks like it will come and go without a final rule in place

With this in mind, a bipartisan group of senators have unveiled legislation that would make clear that firms would not have to comply with the rule until one year after its regulations have been finalized. And a titular sponsor of the financial reform law, Rep. Barney Frank (D-Mass.), has called on regulators to abandon their complex rule and adopt a simpler version by Labor Day, while making clear what exactly firms have to comply with come the July deadline.

But now, it appears the Fed has found its own workaround for the deadline, simply stating that it has the power to extend the time firms have to meet the requirements of the rule if it deems it necessary.