Bank regulators took a step toward curbing the ability of large financial institutions to get bigger as Washington continues trying to lessen the risk giant firms pose to the US economy and taxpayers.

The Federal Reserve on Wednesday finalised a rule, mandated by the 2010 Dodd-Frank financial law, that generally prohibits banks and other financial firms from buying or merging with rivals if the deal would result in the combined firm holding more than 10% of all liabilities in the financial system.