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Fed proposal aims to stop 'too big to fail'

Fed proposal aims to stop 'too big to fail'

A Federal Reserve proposal on Friday would give large banks another buffer, designed to reduce the "too big to fail" perception of big institutions.

Six of eight key U.S. banks would need to raise an additional $120 billion to meet the requirements, according to Fed officials. Rules aim to reduce the risk of the companies— including Bank of America (NYSE: BAC), Bank of New York Mellon (NYSE: BK), Citigroup (NYSE: C), Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM), Morgan Stanley (NYSE: MS), State Street (NYSE: STT) and Wells Fargo (NYSE: WFC) — derailing markets or needing taxpayer money.

The Fed would expect some large banks to add long-term debt to comply. Similar rules would also apply to U.S. subsidiaries of big foreign banks.

"By making the failure of even the largest banks more manageable, the proposed regulation will be another important step in solving the too-big-to-fail problem," said Fed Gov. Daniel Tarullo in a statement Friday.

Read More Why the market is misreading the Fed statement

Six of eight banks assessed would not meet requirements, though officials did not specify which. The Fed's board was expected to vote on the proposal Friday, and it would then be open to public comment.

It is among several rules that would aim to cut risk in the banking system.

CNBC's Mary Thompson and Reuters contributed to this report.



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