In addition, Dodd-Frank added a new requirement that banking regulators consider “risk to the stability of the U.S. banking or financial system” in evaluating any proposed merger or acquisition by a bank or bank holding company. Critics argue that these restrictions are inadequate and subject to exceptions that continue to allow even the largest firms to grow, both organically and through acquisitions.
The simplest forms of this idea would put a further absolute limit on the amount of balance sheet assets or liabilities, or on the risk-weighted assets of a financial firm. Capping the size or systemic footprint of each financial firm would limit the adverse systemic effects of the failure of any single firm.