(Updates with Democratic signers in second paragraph.)
Dec. 22 (Bloomberg) -- A bipartisan group of 121 U.S. House lawmakers asked federal regulators to slow the adoption of the so-called Volcker rule that aims to ban banks from proprietary trading.
Representative Randy Neugebauer, a Texas Republican and subcommittee chairman on the Financial Services Committee, led 117 Republicans and four Democrats who requested an extension of the comment period for the rule, which was proposed in October by the Federal Reserve and three other regulatory agencies. The regulators are taking public comments until Jan. 13.
“Numerous questions have been raised about the proposal, as drafted, that must be carefully examined given the potential impact on capital formation for American businesses and a broader U.S. economic recovery,” lawmakers wrote in the letter dated Dec. 20.
Lawmakers and banking industry trade groups have been lobbying federal regulators to extend the comment period on the measure, which was required by the 2010 Dodd-Frank Act. Representative Spencer Bachus of Alabama, the chairman of the Financial Services Committee, on Dec. 7 requested at least a 30- day delay in the adoption of the rule.
Dodd-Frank requires the rule to take effect July 21, with a two-year transition period.
Earlier this month Bachus delayed a hearing on the rule after saying that “some of the authors” didn’t make themselves available to testify. He didn’t specify which regulators declined. The hearing was rescheduled for Jan. 18.
Trade groups representing banks including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley, have said that the regulators’ proposal lacks specificity and faulted what they say are inflexible exemptions for market-making. Consumer groups and supporters of the rule’s intent, who have pushed for regulators to stick with the timeline, are seeking elimination of some of the exemptions for activities such as market-making, underwriting and risk-hedging.
Copies of the letter were sent to Fed Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro, Acting Comptroller of the Currency John Walsh and Martin J. Gruenberg, the acting chairman of the Federal Deposit Insurance Corp. The letter also was sent to Commodity Futures Trading Commission Chairman Gary Gensler, whose agency is expected to release its version of the rule in January.
The lawmakers requested, along with the extension, that regulators consider releasing an updated proposal to reflect the CFTC’s rule, as well as the initial comments from banking industry and other stakeholders.
--Editors: Lawrence Roberts, Maura Reynolds
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