Banks are throwing their weight around in the debate on size. Lloyd Blankfein is the latest chief executive to retaliate against the creeping acceptance that "too big to fail" is simply "too big". The Goldman Sachs boss told Germany's Spiegel magazine that a world with more but smaller banks, would be just as risky as one with a few financial giants. His arguments are unconvincing.

Blankfein says big isn't bad and reckons it's "completely irrelevant" whether risk is concentrated or spread about. He contends that eliminating the too-big-to-fail predicament would simply create a new problem of "too many to fail".

But the collapse of hundreds of smaller thrifts during the US savings and loan crisis 20 years ago surely proved to be an easier clean-up than could have been the case if Citigroup or Royal Bank of Scotland had been left for dead. The scale of the socialized losses during the present crisis should have finally debunked the notion that bigger might somehow be safer. Lehman Brothers made it plain that the collapse of one large and interconnected institution can wreak havoc around the world.

It is of course in Blankfein's interest that big banks like his be allowed to remain big. An oligopoly of giants squeezes the competition and raises fees. Moreover, the perceived promise of state backing makes it cheaper for Goldman and its extra-large brethren to borrow. This helps to increase profits, share prices and - what do you know - bonuses.

Regulators are rightly moving in the direction of keeping closer tabs on bigger banks, in an effort to make them safer. They will demand higher capital buffers and more liquid balance sheets. They're also being pushed to consider their own demise by drafting "living wills" that would make them easier to dismantle. All this should encourage necessary shrinkage.

Blankfein could turn out to be right that "too many to fail" would pose an equally daunting problem. But it's worth the risk of finding out. Allowing banks to be too big to fail remains too dangerous a policy.

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