Obama admin puts 2-year phase-in on 'Volcker rule'

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The Obama administration said on Wednesday that its proposed "Volcker rule" on curbing risky proprietary trading by banks would phase in over two years, with possible one-year extensions.

In five pages of legislative language, the administration spelled out few details of the rule proposed in January by President Barack Obama and White House economic adviser Paul Volcker as a late addition to proposed financial reforms.

The language called for a ban on banks doing proprietary trading -- or buying and selling of investments by banks on their own books unrelated to customers' needs -- as expected.

It would also limit large, non-bank financial firms from engaging in proprietary trading or investing in a hedge fund or private equity fund.

The proposals face an uncertain future in Congress, with lawmakers having already expressed skepticism about the ability to strictly ban activity that can be hard to define.

The legislative language would leave it to banking regulators to fill in the blanks on how to identify proprietary trading that is done for a bank's own trading books, versus for clients' interests. The latter would still be allowed.

Treasury would also prevent financial firms from acquiring companies if the resulting firm would have more than 10% of the liabilities of the financial system.

Such acquisitions, however, would be allowed if one or more banks were in danger of default, or if the acquisition would result in only a minimal increase in the firms' share of liabilities.