Today, banks that were once “too big to fail” have only grown bigger, with JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, and Goldman Sachs holding assets equal to over 50% of the U.S. economy. Were size and complexity at the root of the financial crisis, or do calls to break up the big banks ignore real benefits that only economies of scale can pass on to customers and investors? Hear my remarks on both sides of the debate.

In fall 2013, I introduced and framed the Intelligence Squared U.S. debate on big banks. In every newspaper you picked up at the time, the headlines covered the big trouble that J.P. Morgan had gotten themselves into.  Yet they would generally be considered to be the best managed of all of the big banks.  Both sides have valid arguments, as always, and here are the key points in “too big to fail” debate.

John Donvan: And we always begin these debates by having a brief conversation with the chairman of Intelligence Squared U.S. who brought this all to us. And what we do is we talk about the relevance of this debate right now. And the relevance is staring us in the face. So at this point I’d like to bring onto the stage, if you could please welcome Mr. Robert Rosenkranz. So, as I said, Bob, timing is everything. We set this debate up months ago. And here we are. Just take us into the relevance of this debate right now.

Robert Rosenkranz: Well, it’s incredibly timely. And when you see — and in every newspaper you pick up, the big trouble that JPMorgan has gotten themselves into, and they would have generally be considered the best managed of all of the big banks, you realize that tonight’s debate is right on in terms of timeliness.

John Donvan: What we like to do in picking these debates is stack arguments where there really are potent arguments, valid arguments on both sides. So let’s just talk through the side now arguing for the motion, the side that wants to break up the big banks, what do they have going for them?

Robert Rosenkranz: Well, I think the first thing one needs to understand is that, what is the role of a bank? The important role of a bank in our economic system is to lend money to consumers who want to spend or to businesses who want to invest. And some of these banks are so large, about a dozen of them, that the government has designated them as “too big to fail”, which means that they have an implicit government guarantee. But those banks are doing so many things beyond that basic function that the argument would be that this is simply a step too far for the government to be guaranteeing all these other activities. These big banks are too complex to manage, as we see.  Run well, et cetera, et cetera. They may be too opaque to regulate. And also it’s an unfair competitive advantage for them to have this implicit guarantee of the government because the banks that don’t find it more expensive to fund their operations, and therefore more difficult to be competitors.

John Donvan: And what’s the argument for the other side?

Robert Rosenkranz: Well, the argument for the other side goes back to the financial crisis and said — says, these big banks were not the cause of the financial crisis. That was Lehman Brothers. That was Bear Stearns. That was AIG. Big banks really had nothing to do with it. Moreover, the big banks are better capitalized and in much better shape now than they were then. And U.S. banks are in better shape than banks anywhere else in the world. In a global economy, you need really big banks to serve global companies and to compete with the big banks in other countries.

And then finally, the question of what kind of regulation. I had a chance to ask Tim Geithner a question today about bank regulation. And he said, “You know, it’s a bit like Afghanistan. You have all of these different tribes, all these uneasy exercises of power and conflict with each other.” And, of course, he’s talking about the incredible complexity of financial regulation in this country. And then if you think about, out of a process like that, if you’re going to hand out a meat ax to whack these big banks, the odds of getting a result that you think is good seem almost infinitesimal.

John Donvan: Well, the great thing about the debate tonight is who our debaters are. You’re about to meet them, but they’ve all really lived and worked this issue for years. So why don’t we bring them out? And again, thanks very much, Bob Rosenkranz.

Watch the full debate and learn more from Intelligence Squared US.