We've heard some mutterings from the radical reactionary camp about breaking up TooBigTooFail (TBTF) banks. Over at Agent Orange, I reacted as followed:
Breaking up TBTF banks is a ... ... one-off intervention. Given a commitment at the same time to unfettered corporate bank activity, within a short time, the TBTF banks will be reconstituted.
What we need is to ban chartered corporations or subsidiaries of chartered corporations from engaging in investment banking activities.
Having the economic institutions that engage in creation and underwriting of corporate share and debentures for sales in publicly traded markets be publicly traded corporations themselves has been proven by the past thirty years to be a catastrophically flawed institution, and we should return to the days of investment banks as independent partnerships.
"Break up the TBTF banks" is just an empty slogan to fill up air, and help keep real solutions from being heard.