12/23/2011 01:44 pm ET Updated Dec 23, 2011

The Volcker Rule, A Key Financial Reform Proposal, Extends Public-Comment Period By One Month

Regulators are giving interested parties more time to weigh in on a major and controversial provision of financial reform legislation, even as a chorus of critics have said that bank lobbyists and others have already watered down the proposal.

(UPDATE: This post has been updated to reflect government agencies' announcement that they will extend the public comment period).

The deadline for commenting on the Volcker rule -- a provision for financial regulation that has attracted the notice of both big banks and Occupy Wall Street -- has been pushed back a month, regulators announced Friday. Previously, the cutoff point was January 13, but the Federal Reserve and other regulators said the deadline will be extended until February 13.

The Volcker Rule, a passage in the Dodd-Frank financial reform act that aims to prevent government-backed banks from making risky trades, has not been finalized yet. Paul Volcker, the former Federal Reserve chairman for whom the rule is named, has said that financial lobbyists have had too much say in the proposal, making it overly complicated. The current draft clocks in at about 300 pages and at the moment, anyone who wants to can comment on this document and express their concerns.

Those concerns might vary greatly, depending on who is doing the commenting.

Many advocates of financial reform, from analysts to legislators to members of the Occupy movement's New York City chapter, say the Volcker rule has been watered down by the same Wall Street interests it's trying to regulate, and that it now contains too many exceptions to be truly effective.

On the other hand, people involved with the financial industry have argued that the rule is too restrictive or too complex, and that it will tie businesses' hands at a time when the economy is already weak.

On Thursday, Rep. Randy Neugebauer of Texas released a letter signed by 121 members of the House of Representatives -- 117 Republicans and four Democrats -- calling for an extension of the comment period.

"Initial reports from asset managers, mutual funds, pension plans and other stakeholders suggest that the rule, as drafted, would result in higher borrowing costs for American businesses, thereby impacting economic growth and job creation," the letter reads in part.

In October, an analyst at the financial company Nomura wrote that the Volcker rule, if passed, would have a major impact on revenue at Goldman Sachs, Morgan Stanley and several other banks.

The evolution of the Volcker rule has been a saga unto itself, with the original proposal growing from three pages to 10 pages to the current novel-length version.