President Barack Obama's proposal to overhaul the financial regulatory system would cut back on the number of institutions that can be classified as "too big to fail." The administration is hoping that by streamlining banks, it can avoid costly rescues such as those engineered for American International Group, Citigroup and others. "Without banning them, we're providing some pretty heavy penalties for entering" the top group of institutions that could pose a risk to the entire financial system, said Diana Farrell, deputy director of the White House's National Economic Council.

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