(REUTERS) -- A group of consumer advocates, academics and economists want to end too-big-to-fail banks, starting with Bank of America Corp.
The group, led by consumer advocacy organization Public Citizen, plans to file a petition with the Federal Reserve Board and other regulators on Wednesday asking them to carve the bank into simpler, safer pieces.
The Fed and the coalition of regulators known as the Financial Stability Oversight Council have the authority to take such action under the Dodd-Frank financial reform law passed in 2010, the group said.
Nearly two dozen professors and groups have joined the effort.
It's not clear how much effect the petition will have, and some community groups have declined to sign on.
However, the petition is a dramatic criticism of regulators who have so far done little to shrink giant banks after the 2007-2009 financial crisis.
Bank of America currently poses a grave threat to U.S. financial stability by any reasonable definition of that phrase, the 24-page petition said.
It said Bank of America, the nation's second-largest bank, is too large and complex, and that its financial condition could deteriorate rapidly at any moment, potentially causing the market to lose confidence in the bank.
An ensuing run on the bank could cause a devastating financial crisis, the petition said.
David Arkush, director of Public Citizen's Congress Watch division, said a lot of the group's concerns apply to other large banks, but that Bank of America is the institution most exposed to the housing crisis.
Regulators need to get ahead of this and act proactively to reform Bank of America, Arkush said.
Bank of America has had a tough time emerging from the financial crisis, particularly because of mortgage losses tied to its 2008 Countrywide Financial purchase.
The bank's stock slid 58 percent last year as investors expressed disappointment with the speed of a turnaround and fear about the bank's ability to comply with new capital rules.
Bank of America has fared better this year. It reported improved capital levels in its fourth-quarter earnings report last week, and its stock has risen 31 percent since the start of the year.
Arkush said he doesn't expect regulators to immediately act on the group's petition.
Dodd-Frank includes mechanisms for regulators to break up large financial firms, but it includes high hurdles for such action.
Bank of America, the Fed and the Treasury declined to comment on the planned petition.
Some community groups decided to pass on signing the entreaty. Janis Bowdler, an official with the National Council of La Raza, said the letter was distributed on a list-serve for a coalition called Americans for Financial Reform, but her group decided not to join up.
I don't want to downplay the concerns that were raised, said Bowdler, but for now, a strong housing market and cleaning up Countrywide is the priority for us.
NCLR is a national Hispanic civil rights organization. It receives financial support from Bank of America.
The Center for Responsible Lending, which has been critical of banks for mortgage lending practices, has also declined to participate. CRL president Mike Calhoun declined comment.
Bank of America was one of the large banks that received a government bailout during the financial crisis. It paid back the $45 billion in 2009, but analysts say it still needs more capital to absorb mortgage-related losses and to meet new international standards.
(Reporting By Rick Rothacker; Additional reporting by Dave Clarke in Washington and David Henry in New York; Editing by Phil Berlowitz)