You seem to keep taking my positions and reducing them to absurdity.

> So I do not think we can work on the assumption that we only need to worry about deposit taking institutions and let investment bank collapse.

I did not say that. Or anything like.

I'm consistently saying:

We should regulate both retail banks and investment banks more.

And part of that increased regulation ought to be splitting investment banking risk from retail banking risk again. Both are risky enough as is. Combining their (sometimes correlated!) risk is a really bad idea.

I agree with you that retail banks can cause huge problems (eg your UK examples). I agree with you that pure investment banks (or merely broker-dealers) can cause huge problems. Hence the need to regulate both and do what we can to prevent crises (not just treat them more effectively), while constraining economic activity as little as we can, of course.