Fed delays swaps rule for Goldman Sachs -two more years to comply with a requirement that it divest part of its derivatives business

In a major concession, the Federal Reserve on Wednesday gave Goldman Sachs two more years to comply with a requirement that it divest part of its derivatives business to a separately capitalized unit.

The Fed said Goldman Sachs would have until July, 2015 to comply.

Known as the Lincoln Rule, after former Arkansas Democrat Sen. Blanche Lincoln, the measure was set up to have riskier credit derivatives trades take place in a separately capitalized unit so that any trading failure there would not have access to the institution's commercial bank division, which is backed by insured deposits and taxpayers through the Federal Reserve's discount window.

Other agencies last month reportedly notified Bank of America and J.P. Morgan and other institutions that they would have any additional 24 months to comply with the regulations.

In addition, bipartisan bills have started to advance in the House and Senate seeking to transform the provision and allow some commodity, equity and credit derivatives tied to asset-backed securities (such as packaged mortgage securities) to take place in the federally-insured bank.