Has Business Gotten Too Big?

According to the New York Times,

...Citigroup is widely viewed, both in Washington and on Wall Street, as too big to
be allowed to fail.

The past six months have brought to our doors a succession of private companies which, we have been told, are too important to be allowed to fail. Perhaps it is true of Citi as a practical matter, but it is deeply offensive to darn near every economic and political bone in my body.

As recently as ten years ago, a block of downtown Boston might contain six or more different banks. Then all at once it seemed like the arena now known as TD Banknorth Garden changed names every few weeks. Shawmut Bank, Fleet Bank, BayBank, the Bank of Boston, and US Trust all disappeared within what seemed like a few years. At least the Patriots still play at Gillette Stadium, at least until an Excel spreadsheet at P&G's headquarters in Cinncinnati says it should be renamed Febreze Field.

It is possible that what we have is the financial equivalent of a 1000-year storm, and if we had a few dozen medium-sized regional banks instead of a half-dozen megabanks, we'd simply have a lot more failing banks in need of help. But it's also possible that with a lot more banks, we'd have more diversification and variation in business practices. Of course, plenty would have made many of the same bad decisions, but none of them singly would present as "too big to fail."