Simon Johnson says The Debate on Bank Size Is Over. "While bank lobbyists and some commentators are suddenly taken with the idea that an active debate is under way about whether to limit bank size in the United States, they are wrong. The debate is over; the decision to cap the size of the largest banks has been made. All that remains is to work out the details. To grasp the new reality, think about the Cyprus debacle this month, the Senate budget resolution last week and Ben Bernanke’s revelation that — on too big to fail — “I agree with Elizabeth Warren 100 percent that it’s a real problem.”"
"But the bigger point from Cyprus is much simpler. Why would you want one or two banks to become so large in terms of their assets relative to gross domestic product that a single mistaken calculation can bring down the economy? In the American context, why would you allow any bank to outgrow the F.D.I.C.’s ability to resolve it in a relatively straightforward and low-cost manner? (The largest bank failure handled to date was that of Washington Mutual, also known as WaMu, with $307 billion in assets; JPMorgan Chase, today the world’s largest bank when measured properly, has assets closer to $4 trillion)."
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