Bernanke: Reforms rein in big banks, help small ones

SAN DIEGO (Reuters) - New financial regulatory reforms should help reduce the edge that large banks have over smaller ones because of their implicit support from government, Federal Reserve Chairman Ben Bernanke said on Wednesday.

Bernanke argued the Dodd-Frank reform legislation will address the issue of firms perceived as too big to fail by restricting their activities, raising their capital requirements and enhancing regulators' ability to wind them down.

"A financial system dominated by too-big-to-fail firms cannot be a healthy financial system," Bernanke told a group of community bankers in a speech that did not touch the broader economic outlook.

"One benefit of the reforms should be the creation of a more level playing field for financial institutions of all sizes," he said.

A number of other top Fed officials, including Richard Fisher, president of the Dallas Fed bank and Thomas Hoenig president of the Kansas City Fed, have argued the legislation does not go far enough. They have called for very large banks to be broken up.