Yes, the efficiency argument can be taken to justify anything. In truth, competition will always increase efficiency more than just scale alone. The compariso

Yes, the efficiency argument can be taken to justify anything. In truth, competition will always increase efficiency more than just scale alone. The comparison with nodes is important and one which most people don't quite get. Banks should be limited in scale. If they need to undertaken large financings, then they can always form a syndicate that exists for a specific project, and is disbanded afterwards. Everyone wants to sheet home the blame to the junk mortgages, or something else, but in reality any financial system is going to encounter shocks, whether they be man-made or perhaps natural disaster. What is important is that the structure of the industry is robust enough so that one or two failures doesn't crater the industry. Think of it like scaffolding - occasionally accidents happen on construction sites. But you don't want the entire scaffolding to collapse as a result. Any failure should be localised. Warfare changed forever when the Generals couldn't sit in a bunker far from enemy fire and send cannon fodder in. It's time to have the finance generals out of the bunker. Ruin a bank, and you should be financially ruined as well.