Long discussion on the Lehrer News Hour about treatment of businesses "too big to fail" such as AIG or CitiBank/Group/Whatever. Not once during the discussion did anyone mention making them smaller. We pride ourselves on being a free market country. Well, you can't have a free market and have monopoly businesses. Once a business acheives a monopoly, it can charge whatever the traffic will bear, there are no competitors left, and we customers get robbed. Any company "too big to fail" is big enough to be a monopoly.
We used to have an anti-trust policy in this country. Anti Trust goes way back, to the 1880's with the passage of the Sherman Anti-Trust Act. This was used to break up Standard Oil, John D. Rockefeller's monopoly oil company, a hundred years ago. There is still an "Anti Trust" division at the Justice department, which was active enough to attempt a breakup of IBM back in the 1960's, and did acheive a breakup of the telephone company in the 1970's. Too bad they went to sleep and haven't done a thing (save draw their pay) for the last 20 years.
Antt-Trust used to go to court to block mergers of big companies. That was useful, 'cause the way companies grow is by merging, taking over, or buying out their competitors. If anti-trust have been doing its job, AIG never would have acheived the size it did before self destructing.
The Justice department would have objected to the mergers on anti trust grounds.
In short, the solution to the "too big to fail" company problem is simple, don't let companies grow that big, and break up the ones that have. We used to do that.