Large financial institutions should face a costly combination of higher capital requirements, tougher regulation and higher insurance premiums "making it less profitable to be `too big to fail'", Ben Bernanke told Congress on Thursday.

The chairman of the Federal Reserve said there was a case for levying higher premiums on the largest interconnected companies, amplifying the risk adjustment made by the Federal Deposit Insurance Corporation. "The FDIC risk adjusts the premiums they charge to banks for deposit insurance," he told the House financial services committee. "Perhaps it's time to revisit that."