Barry Ritholtz points to how the permissive M&A environment of the past two decades has shrunk the number of banks and thrift institutions in the US from over 18,000 in early 1980s to just under 8500 today and where 65% of the depository assets are held by only a handful of banks.
Gretchen Morgenson and Eric Dash discuss the too big to fail arguement.
William Buiter argues that the real issue is size of institutions and therefore "too big to fail" institutions should not be allowed to exist.
Big banks get bigger in the US
Update 4 (5/3/2010)
Simon Johnson has this article which claims that it is the ability of major banks to generate the conditions that make major international financial crises possible (with the incentive to take risks that, when things go well, result in huge upside for bankers and, when things go badly, massive downside for the rest of us) that is a cause of concern for us.
As he argues, the central pretense of current reform efforts is that we can design a "resolution authority" of some kind that would allow the government to take big banks into a form of bankruptcy or liquidation.