Rep. John Campbell (R-Calif.) yesterday introduced legislation aimed at reducing the size of "too-big-to-fail" banks by requiring them to hold more capital including long-term debt, Bloomberg News reported yesterday. Campbell's bill comes as a number of lawmakers and regulators from both parties—including Federal Reserve Governor Daniel Tarullo—argue that the 2010 Dodd-Frank Act failed to curb the growth of large banks and express support for renewed efforts to limit the kind of systemic risk that fueled the 2008 financial crisis. Campbell’s bill would require banks with at least $50 billion in assets to hold an additional layer of capital in the form of subordinated long-term bonds totaling at least 15 percent of consolidated assets. If an institution were to fail, the long-term bondholders would be guaranteed reimbursement at no more than 80 percent of the face value of the debt.
