No I don't think the banks should be broken up but yes they should be allowed to fail.

The government should create a special category for these banks that equates to an Invest At Your Own Risk for people interested in working with the bank.

There should be several categories of bank. Some that meet specific secure lending and investment criteria that are protected by the FDIC, these banks would also be limited to a certain size maybe less than 2 billion in holdings

then there could be these larger mega banks, who would have fewer regulations to the size and services they provide - it would be understood that anyone who did business with these banks would be protected from outright fraud but not be protected from the typical mismanagement that you see at these larger institutions

Can the economy survive a mega bank going bust because of irresponsible, reckless or just plain stupid investments and loans? If so, then the government should back off. But the real world nuts and bolts economy should never be at risk of a major meltdown due to the sheep like mentality of the financial world. The reality is we are not merely at risk of a single large bank failing. We are at risk of the entire system crumbling since the herd like mentality of the financial world tends to believe in the fairy tale that we can all invest in exactly the same manner and we can all rake in the same massive real dollar profits. Simple arithmetic will tell a grade school child that is an impossibilty.

"If we excise the words "too big to fail" from our vocabulary, then Congress doesn't have a leg to stand on for their legislation to break up the big banks. He wants to avoid government intervention."

Very sharp insight, Ms Madon -- very sharp indeed.

Thanks for pointing out a technique which has been growing in usage by leaps and bounds across all public sectors -- right up there with the non-denial denial, the un-repentant "apology", and the various versions (rampant in the Obama Administration) of "the check's in the mail".

Was it G.B. Shaw who said that English was "a treacherous, double-dealing tongue"? Or maybe it was Sitting Bull ...

"Should the big banks be broken up?"

Most definitely.

The anti-trust acts (Sherman, in 1890, and Clayton, in 1914) were promulgated with the express thinking that businesses should not become so big and powerful as to victimize the consumers and threaten the stability of the nation.

The steady decline of education has resulted in broad ignorance, especially in history. Politicians and businessmen exploit this ignorance to pass laws and promote business practices that lead to the excesses and economic disasters such as the one through which we are now suffering.

I think that the other comments sum the article up. If any nation is going to run with entities,financial or otherwise, that, whose failure would be highly disruptive is foolish. In the present sense, it was not a case of "too big to fail", but a case of "being part of the herd" as previously mentioned by another. A single spooked steer on the run is not a problem until they are joined by 500 more. It becomes more of a problem when the whole herd is heading toward a cliff.

It is a decent analogy and we all know why this had to be prevented.

If I had to choose between breaking them up and regulating, I would go with J.C. Trichet regulate the hell out of them. It's the only damn thing that they understand and one can use the aftermath of the crash as an example. Credit crunch, hikes in credit card rates, etc., all taking place when libor is at all time lows. The entire financial arena needs a custodial watchdog.