A system is stable and productive if it is complex and not centrally directed. Therefore, economists don't like big firms because they make the economy more centrally directed, and unstable. The failure of big firms will have disastrous effects throughout the economy.
However, U.S banks are now so big, and interconnected that it is very hard for the government to break them up without negative effects to the financial system. According to 5-Bank Asset Concentration for United States, top 5 U.S. banks' total assets increased significantly from 1998 to 2012. They hold about 30% of total U.S. banking assets in 1998, 37% in 2004, 45% in 2008, 50% in 2010, and 47% in 2012. Those numbers show us how big and power-centered these banks are. Moreover, some economists believe that the big firms should not be broken into smaller ones. Paul Krugman, an American Economists and professor of Princeton University, insists that the economics of scales between large firms should be saved, as long as those firms are well regulated. According to his article, Financial Reform 101, from The New York Times, breaking up big financial institutions will not guarantee the safety of the economy. In fact, the Great Recession in the 1930s was caused by the failing of many small local banks. At first, it was the failing of investment banking activities, followed by "bank runs." Bank runs occur when people lost confidence in their banks and decided to withdraw deposits from their banks. As more and more people withdrew their deposits, the bankruptcy possibility of banks became higher, and this encouraged more withdrawals. When small banks were nearly bankrupt, the Federal Reserve thought that it was not necessary to save them. Finally, it turned out that the failing of those banks was destructive for the economy. Paul Krugman says that even if those banks were not bailed out by the government, they probably still would have collapsed.
