Dallas Fed Cap Seen Shrinking U.S. Banking Units by Half

A proposal by the Federal Reserve Bank of Dallas to limit government support for banks could force JPMorgan Chase & Co. and Bank of America Corp. to shrink their U.S. consumer and commercial-lending units by more than half.

The plan would cap assets at deposit-insured divisions of the largest U.S. financial firms at about $250 billion and wall off investment banking from traditional lending, Dallas Fed Executive Vice President Harvey Rosenblum said in an interview. The limit is needed to allow the Federal Deposit Insurance Corp. to shut a failed bank without using taxpayer funds, he said.