>"it's not on the hook for its own risk."

Tell that to the Bear Stearns equity holders, who were 99% wiped out, or the Lehman Bros. equity holders who were completely wiped out.

>"Banks need to be broken up, so that they are no longer "too big to fail.""

Fine, if you want to cripple long term economic growth by requiring banks to hold far more liquid assets. Or, they can rely on the Fed as the lender of last resort to step in when they need liquidity (which the Fed has done). I prefer the latter.