House Committee Lobbies for Right to Repeal Volcker

Could the Volcker Rule get erased before it's fully written?

In a strongly worded letter to the five regulators tasked with writing the much-maligned rule that places limits on banks' trading abilities, the House Financial Services Committee urged transparency during the rulemaking process — or the right for Congress to amend or repeal the outcome. (Read More: No Volcker Rule Until 2013: Sources)

In the letter — sent Thursday morning to regulators and obtained by CNBC — the committee's ranking Republicans Reps. Spencer Bachus (R.-Ala.), and Jeb Hensarling (R.-Texas), challenged the amount of time that has passed since regulators made public the most recent draft of the rule.

"The resulting confusion has only made it that much more likely that whatever final rule you issue will compound the regulatory uncertainty that continue to plague our economy," Reps. Bachus and Hensarling wrote.

The letter comes the same day that the Committee announced a set of hearings to take place in December to collect feedback on both the Volcker Rule and impending derivatives legislation. (Read More: Volcker Says Rule Already Changing Wall Street)

According to congressional sources, the Volcker hearing was originally slated to feature the five coordinating regulators but scheduling was impeded by the December Federal Open Market Committee meetings.

• Bachus-Hensarling Letter, Click Here
  

Instead, the committee is using Thursday's letter to make its stance on Volcker — that the costs likely outweigh the benefits, especially for smaller institutions — well known. It also raises the specter of U.S. banks being put at a competitive disadvantage if they're too highly regulated. (Read More: 'No More Excuses' from Banks or Regulators: Analyst)

As Washington toils over the exact contents and language of the rule, the financial services committee urges regulators to extend its effective date until at least two years after the final draft is written, the letter states.

That draft had been expected by year-end, a deadline that has since moved to the first quarter of 2013, according to regulatory officials. Banks have been obligated to operate in the "spirit" of the Volcker Rule since July 2012, the two-year anniversary of Dodd-Frank, with full compliance required by July 2014.

—By CNBC's Kayla Tausche; Follow Her on Twitter @KaylaTausche