Big Banks Granted Two More Years to Comply With Shifting Risky SWAPS Into New Affiliate

“WASHINGTON—Some of biggest banks on Wall Street will get an additional two years to comply with a post-financial crisis rule requiring they move risky swap activities into separate affiliates.

The Office of the Comptroller of the Currency said it granted extensions to seven banks, giving them until July 2015 to comply with so-called “swaps push-out” rules required by the 2010 Dodd-Frank law.

While the move was largely expected, the OCC’s action could further inflame criticism that much of Dodd-Frank remains undone nearly three years after its passage. As of June 3, just 38% of rules required by Dodd-Frank had been finalized, while 63% of rule-writing deadlines have been missed, according to law firm Davis Polk.

The OCC notified Bank of America Corp., BAC -1.37% J.P. Morgan ChaseJPM -1.63% & Co., Citigroup Inc., C -3.96% Wells Fargo WFC -1.50% & Co., HSBC Holdings HSBA.LN +0.33% PLC, Morgan Stanley MS -4.06% and U.S. BancorpUSB -0.51% that they were granted a 24-month extension in response to their requests for a longer transition period.

The banks declined to comment.

The move comes less than a week after the Federal Reserve said foreign banks also will be eligible for the two-year delay in complying with the rule, which is slated to take effect July 16.

The rule is intended to move some of the banks’ riskiest activities to affiliates that aren’t eligible for access to the federal safety net, including federal deposit insurance and the Fed’s discount window. The provision, pushed by then-Senate Agriculture Chairman Blanche Lincoln (D., Ark.), requires banks to spin off some derivatives trading operations into separate units….”

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