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To: Gottfried who wrote (3097)	9/26/2008 1:53:24 PM
From: Sam Citron	Respond to of 5891

We should require [the big banks] to split up so that each part CAN fail without creating financial tidal waves That was one of the essential ideas behind the Glass-Steagall Act, which has now been repudiated. Many say there are still far more banks than are needed in USA. Business like banking which are transactional in nature and depend on risk management and data processing systems have huge economies of scale. Why deny them these real efficiencies of consolidation? "Too big to fail" [TBTF] or "too interconnected to fail" are troublesome lines in the sand that deserve attention. You are right that they could pose too great a temptation for banking consolidation, on the grounds that consolidators will bailed out if they get into trouble. At the other end of the argument is the FDIC insurance system which helps at-risk banks by insuring depositors at artificially low insurance premiums. The current financial crisis underscores the need for thorough study and reform of our financial system.