Time to Pull Plug on 'Too Big to Fail'

It's more than a year after Americans learned the definition of "too big to fail," and it's time to push through the reform that will save having to re-learn that painful lesson, writes Paul Volcker in the New York Times. "As things stand," writes the chair of the president’s Economic Recovery Advisory Board, big banks now know that the taxpayers will bail them out, resulting in enhanced "incentives to risk-taking and leverage, with the implication of an even more fragile financial system."

Even though many "long to return to 'business as usual,' " there "is no substitute for structural change," Volcker contends, and the government must write a "living will" for the very banks labeled too big to fail. Under the regulatory agency President Obama is seeking, "these capital market institutions would be free to innovate, to trade, to speculate—and as ordinary businesses in a capitalist economy, to fail." (More Paul Volcker stories.)