Talking to lawmakers, FDIC chief suggests limits on bank size

Federal Deposit Insurance Corp. chief Sheila Bair discussed limiting the size of financial institutions to prevent lenders from becoming “too big to fail,” House Democrats said Tuesday after a closed-door meeting with her.

Rep. Brad Sherman (D-Sherman Oaks), a member of the House Financial Services Committee, said Bair offered the possibility of regulating financial firms’ growth to prevent any from becoming so big that the government would be forced to take it over if it got into trouble.

“Maybe there should be limits on the size of institutions,” Sherman said Bair suggested during the meeting. “There was a positive response from people in attendance.”

Bair has said she wanted to “end too big to fail” models that have shaped U.S. policy and wanted financial firms to reduce systemic risk by limiting their size and complexity.

The FDIC chief said in March that regulators needed to impose stronger capital requirements to ensure that banks had enough capital to withstand worsening economic scenarios.