Trillion-Dollar Banks Could Get Bigger Under Financial Overhaul Law

The nation’s four biggest banks can grow even bigger, with the potential to add at least another trillion dollars onto their balance sheets before they even reach the limits imposed by the Obama administration, according to an administration…

The nation’s four biggest banks can grow even bigger, with the potential to add at least another trillion dollars onto their balance sheets before they even reach the limits imposed by the Obama administration, according to an administration study released Tuesday.

Dodd-Frank, the 2010 law overhauling financial regulations, calls for regulators to impose a ten percent cap on individual financial firms’ liabilities relative to the entire system. The rule is intended to prevent lenders from becoming so large that their collapse would threaten the health of the broader financial system.

Firms that hit that cap are not supposed to be able to grow through mergers or acquisitions, and banks that wish to get that big by gobbling up a competitor shouldn’t be allowed to.

Read More…
More on Financial Crisis