U.S. corporations join Volcker rule critics' club

* Companies send letter to regulators

* Say rule will damage liquidity, capital raising

* Seek discussion, more time to tweak proposal

By Alexandra Alper

Feb 15 (Reuters) - A group of large corporations, including General Electric and Boeing, have joined the fight against the Volcker rule that limits the ability of banks to make speculative bets with their own funds.

In a letter to regulators, dated Feb. 14, the companies and the U.S. Chamber of Commerce argue the Dodd-Frank law reform will "have far-reaching negative consequences that will impede our ability to raise capital and manage risk."

They say regulators may have overlooked the rule's impact on end users of financial markets.

The Volcker rule, named for former Federal Reserve Chairman Paul Volcker and mandated by the 2010 Dodd-Frank financial oversight law, aims to prevent financial institutions that receive government backstops, like deposit insurance, from making risky trades with their own money.

Heralded by supporters as a means to rein in the risk-taking that nearly toppled the financial system during the 2007-2009 financial crisis, the Volcker rule has been criticized for taking liquidity out of financial markets.

The rule's first draft was proposed by regulators in October and it is supposed be finalized before the rule goes into effect this July, as mandated by law.

It would have the biggest impact on large banks such as Goldman Sachs and Morgan Stanley.

Companies - from grocery chain Safeway Inc to healthcare company Abbott Laboratories - are telling regulators their rule will damage corporate liquidity and make it harder for businesses to raise money.

"The extensive and granular infrastructure created by the 298-page draft rule runs the risk of restricting financial institutions from providing businesses with the beneficial market making and underwriting functions that are needed to raise debt, issue equities and manage risk," the letter said.

"We strongly urge you to thoroughly evaluate the impact of additional regulation on American businesses and the broader economy and not move forward with the implementation of the Volcker Rule in its current form."

They asked the Federal Reserve, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp to hold a roundtable with stakeholders and provide additional time to "identify unintended consequences and craft policies to avoid them."