Banks too big to fail: Should they be propped up, or split up?

How can the U.S. solve its systemic banking issues? If you're former Federal Reserve Chairman Paul Volcker (pictured) or Bank of England Governor Mervyn King, your answer would be: Let's split up the banks. Volcker would like to see some form of a Glass-Steagall-like bill passed to reconstruct the wall between commercial banking and investment banking. Glass-Steagall, a law passed after the Great Depression, was repealed in 1999.

But from actions they've taken, it appears that others, including current Fed Chairman Ben Bernanke and current Treasury Secretary Timothy Geithner, think propping up the largest banks is the best way to go. In fact, they clearly like to see big banks getting bigger. John Mack, CEO of Morgan Stanley (MS), has spoken of the pressure he faced from Bernanke and Geithner to merge Morgan Stanley with JPMorgan Chase (JPM) during the depths of last year's crisis. Bank of America's (BAC) tale of woe regarding how it was pressured to acquire Merrill Lynch is very similar in tone.