WASHINGTON - Federal regulators have delayed the release of new merchant banking rules since late last week while debating the size of capital requirements and dodging bankers' heavy opposition to the special charges, industry sources said Tuesday.

The issue has become so thorny that the Federal Reserve Board and Treasury Department are expected to split off the capital question and simply issue a rule expanding merchant banking authority in line with the Gramm-Leach-Bliley Act of 1999. The rule, however, is not expected to be issued until Thursday at the earliest.

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