Sanders’ bill would bar financial institutions from holding assets, derivatives, and other forms of borrowing worth more than 3 percent of the entire US economy, or $584 billion in today’s dollars.

The measure is dead on arrival with a Republican Congress and President Trump in office. And even if the current Democratic Party were to take control of government, it would face a difficult path to passage, as many of the party’s moderates have opted for answers to the banking crisis that did less to alter the financial system.

WASHINGTON — Senator Bernie Sanders of Vermont is proposing legislation that would place a hard cap on the size of financial institutions, a proposal that would splinter Wall Street’s biggest firms in an effort to ward off future taxpayer bailouts.


The legislation would force federal regulators to break up six different Wall Street firms — JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley — as well as insurance giants such as Prudential Financial and MetLife. Collectively, the targeted firms hold more than $13 trillion in assets, according to Sanders aides.

Despite its unlikelihood of passing in the near term, the measure could become a marker for Democrats seeking support from the party’s progressive voters, much like a single-payer, universal health care system has become.

Sanders touts the plan as a way to prevent a repeat of the financial crisis of a decade ago, when banks on the edge of collapse were large enough that their failures would rock the fundamentals of the global financial system. In response, the federal government extended the banks huge loans, a move largely credited with blunting the crisis but also giving government funding to wealthy individuals at a time when unemployment was soaring and thousands were losing their homes.

‘‘We spent huge amounts of money bailing them out, and they are significantly larger now than they were back then,’’ Sanders said in an interview. ‘‘It’s time we return to that discussion, especially now for the 10th anniversary [of the crash].’’


In response to the crisis, Democrats narrowly passed a broad banking law that was meant to ensure that ‘‘too big to fail’’ banks took steps to ward off failure.

The law, signed by former president Barack Obama, had 16 separate chapters and ran more than 2,300 pages long. Sanders’s measure runs seven pages, and instead goes after the size of banks, arguing firms of that size pose an inherent risk to the economy.

The senator, who identifies as a Democratic socialist, and his supporters say the firms should be broken up to prevent future rescues, while critics say Sanders is advancing an unpractical bill with no chance of being enacted.

‘‘This legislation cuts to the heart of the matter, by putting a size cap on the largest highly leveraged firms. The size cap is simple, straightforward, and transparent,’’ said Simon Johnson, an economist at MIT who served as chief economist of the International Monetary Fund and supports the bill. ‘‘This measure will bring us closer to full and fair competition in the financial system, where a few megabanks currently predominate.’’

Four of the six biggest banks are on average 80 percent bigger than they were when they started receiving bailout funding about a decade ago, according to Sanders aides, as many of the largest financial firms acquired distressed banks during the crisis.