The Financial Times offers an opinion rejecting the notion that any business should be deemed "too big to fail". The argument comes in X parts. First, sluggish giants aren't a source of innovation:
If “too big to fail” is incompatible with democracy, it also destroys the dynamism that is the central achievement of the market economy. In principle, there is no reason why disruptive innovations and radically new business models should not come from large, established, dominant companies. In practice, the bureaucratic culture of these organisations is such that this rarely happens. Revolutions in business generally come from new entrantsArguably, some large companies - and especially the "too big to fail" companies - retard innovation by taking advantage of their market position to exclude new competitors. Second, selective government support for any company "distorts competition" and is "damaging to innovation and progress". Third, promises of future regulation are not credible and fail to hold current managers to account for their failures.
The author argues that banking is no different from any number of other essential services, including the electric grid and water supply, and that it's continuity of service that's important, not who happens to be providing the service.
In all industries where there is or might be a dominant position in the supply of essential public services, there needs to be a special resolution regime. The key requirement is that assets that are needed for the continued provision of these services can be quickly separated from the organisations engaged in their supply. The businesses involved must be required to operate in such a way that such a separation is possible.Not a bad idea.