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The U.S. economy is still reeling from the financial crisis that exploded in the fall of 2008. This Article asserts that the big banks were major culprits in causing the crisis by funding the non-bank lenders that created the toxic mortgages, which the big banks securitized and sold to unwary investors. Ironically, banks that were then too big to fail are even larger today.

The Article briefly reviews the history of banking from the Founding Fathers to the deregulatory mindset that has been present since 1980. It then traces the impact of deregulation, which led to the savings and loan crisis of the 1980s and the current financial crisis. Prior to deregulation, the country had gone fifty years without a financial crisis. The Article briefly examines the causes of the crisis and analyzes in depth the financial innovation, such as adjustable-rate mortgages and credit default swaps, that former Fed Chairman Alan Greenspan extolled but that led us into a near financial meltdown. It traces the growth of the big banks and asserts that breaking them up would improve efficiency, permit risk to be priced appropriately, increase competition, and eliminate many conflicts of interest, including those of management who pursue greater financial rewards by ignoring the potential for catastrophic risk. It also asserts that regulation cannot be left in the hands of regulators who do not believe in regulation.