U.S. senators: 'Mega banks' must up capital

Two U.S. senators released Wednesday the details of legislation that would force "mega banks," including Bank of America and Wells Fargo, to raise capital levels to 15 percent of their assets. Mid-sized and regional banks would be required to increase capital levels to 8 percent.

The bill, by Sherrod Brown, D-Ohio, and David Vitter, R-La., would end "too-big-to-fail policies," the lawmakers said. The legislation is dubbed the Terminating Bailouts for Taxpayer Fairness Act. Brown and Vitter are calling for banks to "fund themselves with equity investments, rather than debt."

Having enough capital lessens the likelihood that financial institutions will fail, the lawmakers said, adding that higher capital levels also lower the costs to the economy if one does collapse.

"Despite receiving assistance from taxpayers in 2008, today the nation’s four largest banks — JPMorgan Chase, Bank of America, Citigroup and Wells Fargo — are nearly $2 trillion larger today than they were before the crisis," Brown and Vitter said. "Their growth has been aided by an implicit guarantee — funded by taxpayers and awarded by virtue of their size — as the market knows that these institutions have been deemed 'too big to fail.'”

The 15 percent capital requirement would apply to banks with at least $500 billion in assets. Community banks would not face new capital standards, as they already have capital rates of about 10 percent, Brown and Vitter said.

The senators have been working on the bill for months. But it is expected to encounter obstacles, both from banks and some lawmakers. Just this month, Wells Fargo's CEO, John Stumpf, said during an earnings call that "we do not need additional legislation aimed at big banks."

The lawmakers unveiled the legislation at a press conference in the Senate.