The banks want to be able to charge what they want, just as if they were working in a free-market, capitalist system. Government regulators setting fees is very similar to a heavily-regulated utility.

On the other hand, they fully expect to be treated as privileged TBTF institutions, able to uniquely tap into very low interest funds at the Fed and Treasury windows. In a crisis, they expect to have their incredibly risky behavior covered by the government so that they can survive intact, without bond-holder, share-holder or employee losses.

So we have a conundrum. They are either a regulated utility or a free-wheeling hedge fund. Being both is unacceptable from a societal standpoint.

I say we let them choose.

They can be either: TBTF status with utility-like regulation, including setting compensation limits and fees; or they can be free-wheeling with the ability to fail in a crisis.

This latter category would need to come with some required limits on either size or leverage ratios to avoid massive economic and financial system damage. So the entrepreneurial spirits within the organization could haive off separate units as it gets bigger, so that they can continue to make large profits and reap the rewards without endangering the system.