Without a doubt, the big banks should be broken up; the need is even more urgent than it was in 2007 or 2008. The Federal Reserve Bank of Dallas – hardly an Occupy Wall Street affiliate – titled its 2011 Annual Report "Choosing the Road to Prosperity: Why We Must End Too Big to Fail – Now."
In the report, Dallas Fed President Richard W. Fisher called for a drastic "downsizing" of the megabanks. Financial institutions after the crash remain "too-big-to-fail," he argued – in fact they're bigger than ever – guaranteeing taxpayer bailouts when the system breaks down again.
He's right, of course. Banking in the United States has become extraordinarily concentrated. Waves of change have swept over financial services throughout the era of deregulation, primarily resulting in an economy skewed toward extraction of value by financial institutions. The financial crisis was actually the culmination of the process of concentration, as Lehman evaporated and Bear Stearns and Merrill Lynch were absorbed into JP Morgan Chase and Bank of America respectively. Well over half of all bank assets are now held by just five banks.
However, there is another argument against the megabanks not predicated on financial crisis. In fact, it happens every day.