“‘Too-big-to-fail’ legislation set to be unveiled in Washington is needed to rein in the biggest U.S. banks because the Dodd-Frank Act has failed to guard taxpayers against future bailouts, the bill’s sponsors said.

“The four largest banks — JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc. and Wells Fargo & Co — ‘are nearly $2 trillion larger than they were’ before the 2008 credit crisis, during which they got U.S. aid, Senators Sherrod Brown and David Vitter wrote in a New York Times (NYT) column today.

“’The federal help continues — not as direct bailouts, but in the form of an implicit government guarantee,’ wrote Brown, an Ohio Democrat, and Vitter, a Louisiana Republican. ‘The market knows that the government won’t allow these institutions to fail.’

“Brown and Vitter, whose plan is opposed by key lawmakers, are proposing a 15 percent capital requirement for so-called megabanks as a way to reduce risk and remove the perception that they would get bailouts in a crisis. Midsize and regional banks would need to have 8 percent capital relative to assets and the bill is “silent” on capital for institutions below $50 billion in assets, Vitter said today at an Independent Community Bankers of America conference.”

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Read full Bloomberg article here