* APRIL 21, 2010, 2:05 P.M. ET
By VICTORIA MCGRANE
WASHINGTON—A group of Senate Democrats said Wednesday they will try to place strict limits on the size of financial firms as part of legislation to overhaul the nation's fiscal regulations.
"This is what it takes to make sure we never have to revisit 'too big to fail,'" Sen. Ted Kaufman (D., Del.), a lead sponsor of the proposal, told reporters on a conference call.
The measure is a clear signal that liberal Democrats will try to move the financial-overhaul bill to the left when it reaches the Senate floor. Given voter anger against Wall Street, Democrats as well as moderate Republicans could feel pressure to support an amendment that claims to keep the big banks from growing so large they could "jeopardize the entire economy," as one bill sponsor, Sen. Sherrod Brown (D., Ohio), described the measure.
Mr. Brown challenged Republicans to support the measure. If they are really interested in stopping future bailouts of financial firms, they would support the size limits, Mr. Brown said.
Wall Street is sure to oppose the proposed limits. Mr. Brown said three financial institutions already violate the bill's limits: Bank of America Corp., J.P. Morgan Chase & Co. and Wells Fargo & Co. The bill would give those banks three years to cut themselves down to size, Mr. Brown said.
The measure, which sponsors will introduce as a standalone bill Wednesday, would limit any bank holding company to having no more than 10% of the nation's total insured deposits. It would also cap a firm's nondeposit liabilities. The measure would cap banks' nondeposit liabilities to 2% of U.S. gross domestic product, while nonbanks would be capped at 3% of GDP.
Finally, the measure would codify into law a 6% leverage limit for bank holding companies and certain nonbank financial institutions.
Three other Democrats are joining Messrs. Brown and Kaufman in support of the bill, Sens. Jeff Merkley of Oregon, Robert Casey of Pennsylvania and Sheldon Whitehouse of Rhode Island.
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