UPDATE 1-Volcker: Don't turn rule into Swiss cheese
(adds details on Volcker's views on exemptions)
NEW YORK/WASHINGTON, June 21 (Reuters) - White House economic adviser Paul Volcker has told U.S. lawmakers they should not let his proposed Volcker rule limiting banks' risky trading be undermined by loopholes.
"He has told several people, including some lawmakers, that he does not want the Volcker rule to look like Swiss cheese," his office said in a statement to Reuters on Monday.
The Volcker rule, named after the former Federal Reserve chairman, would ban risky trading by commercial banks that is unrelated to customers' needs. Such trading is blamed for aggravating the 2008-2009 global financial crisis.
As negotiations over a sweeping financial regulatory bill move closer to the finishing line in Congress, it has looked increasingly likely a version of the Volcker rule will become law.
Banks vehemently oppose the rule which they argue would cut into their profits. They have been pressing lawmakers for exemptions to a part of the proposed Volcker rule that would curtail their ties to private equity and hedge funds.
Volcker is concerned that exemptions tend to expand over time, according to a person familiar with his thinking.
He is not opposed to all exemptions, however, the person said. He had endorsed the proposed Merkley-Levin amendment to the Senate's regulatory reform bill, which included a carve-out to assist insurance companies and asset managers.
The Merkley-Levin amendment, named after Democratic senators Jeff Merkley and Carl Levin, was not included in the Senate bill currently being reconciled with a House of Representative version.
Representative Barney Frank told Reuters last week Volcker's opposition to exemptions will be pivotal as a Senate-House conference panel considers the historic legislation.
President Barack Obama's administration has been working behind the scenes to urge lawmakers not to water down the Volcker Rule.
Volcker, for his part, has been fielding countless calls from lawmakers and is prepared to head for Washington from his New York office at a moment's notice.
He cancelled a salmon fishing trip that would have lasted most of June to be available for questions -- though he did manage to get away for a few days of trout fishing in upstate New York, the person said.
(Reporting by Kristina Cooke and Caren Bohan; Editing by Andrew Hay) ((email@example.com; Tel: +1 646 223 6154; Reuters Messaging:rm://firstname.lastname@example.org))