The Federal Reserve Board on Thursday said U.S. banks will be given a two-year grace period to enact all the elements of the so-called Volcker rule which prohibits banks from trading with their own money.
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The banks will have until July 21, 2014, to put in place the rules approved as part of the Dodd-Frank banking reform bill passed in 2010.
The Fed said the deadline could be extended up to three years.
"During the conformance period, banking entities should engage in good-faith planning efforts, appropriate for their activities and investments, to enable them to conform their activities and investments to the requirements,” the Fed said in a policy statement.
The Fed statement resulted from confusion on the part of banks that are being asked to implement complicated reforms that have yet to be fully drawn up and approved by the regulators charged with enforcing the measures.
The new law is scheduled to take effect on July 21 even if regulators have not settled on exactly how the law should be enacted and enforced.
The Fed statement is intended to quell fears raised by the banks that they might spend a lot of time and money putting in place new policies that will have to be changed once the regulators decide exactly how the Volcker rule will be enforced.
Fed Chairman Ben Bernanke had attempted calm those fears in past statements, but the banks apparently wanted it in writing.
In addition to the Fed, other regulators that signed off on the two-year grace period included the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission and the Commodity Futures Trading Commission.
The Dodd-Frank bill came about in an effort to prevent another financial crisis brought on by banks making exceedingly risky bets in an effort to boost their profits.