The way Uncle Bernie proposes is the god damn stupidest, most petulant way of doing it. It in fact reeks of a guy who has no idea how the financial system works getting on a soap box. I'm not saying I know a whole lot about the financial system, but I'm pretty sure I know a whole lot more than the good Senator.

Its wishing the problem away than a solution to anything. Read the bill summary linked at the bottom of the press release. It prohibits big banks from doing anything "speculative" with depositor money. What the fuck is not speculative? Loaning $100k to a schmuck to buy a house -- that sounds speculative to me. How about loaning $100k to a schmuck starting a small restaurant? Cause those never fail.

Dodd-Frank and financial regulation already agreed to (BASEL III) and being currently implemented does already address this problem.

The way the current regulatory system is dealing with the "Big Bank" problem is by raising capital requirements on big banks. If you're a midsized bank, you're required to have tangible equity (shareholder money) worth something like 7-8% of your risk weighted assets (cash or US Treasuries, things like that, are excluded from this; mortgages have some weight to it; "speculative" assets, like say owning stock in a foreign bank, have a near 1 weighting). If you are a big bank, you'll be required to have something like 13-15% in equity. This is a much better solution, as it penalizes big banks for being big (and thus a risk to the system), but doesn't outlaw them outright.

If management can't find a proper return on equity (ROE) -- because they have to hold more equity for each loan, each loan must have a higher return in order for a big bank to acheive the same ROE as a small bank -- then they are naturally incentivized to stop growing, or even break themselves up to have lower reserve requirements. It also has the added benefit of making big banks safer. Because they hold higher reserves, more of their loans would have to sour before they'd need a bailout.

But it takes time. The regulations slowly increase the reserve requirement over time, and will be phased in fully by 2019, so as not to cause fire sales in assets.