* Regulators have been "less than transparent," lawmakers say
* Republicans say banks should have 2 years to comply with rule
By Emily Stephenson
WASHINGTON, Nov 29 (Reuters) - Two influential Republican lawmakers on Thursday asked U.S. regulators to delay the effective date of the controversial ban on proprietary trading known as the Volcker rule, which financial regulators are still writing.
The 2010 Dodd-Frank law charged five financial regulatory agencies with crafting the rule to prevent banks from making speculative trades with their own money.
But the final version of the rule, which was named for former Federal Reserve Chairman Paul Volcker, who pushed for the ban, has been delayed amid disagreements among the agencies and lobbying from banks.
Representatives Spencer Bachus, of Alabama, who is the chairman of the House of Representatives Financial Services Committee, and Jeb Hensarling, of Texas, who has been selected to lead the committee next year, said regulators must explain how they will implement the rule and give banks more time to comply once it is released.
"Unfortunately, you have been less than transparent about how you intend to implement the Volcker Rule, and the resulting confusion has only made it that much more likely that whatever final rule you issue will compound the regulatory uncertainty that continues to plague our economy," they said in a letter.
"We respectfully suggest that the Federal Reserve Board delay the Volcker rule's effective date until two years after the date on which the final rule is promulgated," they said.
Many bank critics have blamed proprietary trading for exacerbating the 2007-2009 financial crisis. They say the Volcker rule would curb excessive risk-taking by banks that receive government backstops such as deposit insurance.
Banking groups counter that the rule would cramp liquidity and could hit parts of their business that are not as risky.
The proposed rule covers trades in securities, futures and commodity forwards, or contracts to buy or sell a certain amount of a commodity at a particular point in the future.
The Fed, the Federal Deposit Insurance Corp, the Office of the Comptroller of the Currency, the Securities and Exchange Commission and the Commodity Futures Trading Commission were supposed to finalize the Volcker rule earlier this year.
But regulators still have not released a final version. In April, the Fed said banks would have until July 2014 to comply and that it could extend the deadline if needed.
Officials have indicated that they hoped to finish the rule by the end of the year, but industry observers now say it could be pushed back into 2013.
Proponents of the ban have urged regulators to finish the rule as soon as possible.
Senators Jeff Merkley and Carl Levin, the Oregon and Michigan Democrats who authored the Volcker rule provision in Dodd-Frank, last month told regulators to release a final rule in 2012, even if only three of the five agencies approve it.
Bachus and Hensarling on Thursday asked regulators not to split up, saying that competing versions of the rule from different agencies would confuse banks and that regulators must "speak with one voice" to comply with Dodd-Frank.
The Financial Services Committee plans to hold a hearing on Dec. 13 to hear from the industry on the potential effects of the Volcker rule.