Ten years ago, Tom Hoenig, a former classmate in the doctoral programme at Iowa State (and now President of the Kansas City Fed) wrote about how "too big to fail" can induce banks to take on too much risk in the expectation that the gubmnt will bail them out if there is a serious crash. From his summary,
To the extent these institutions become ‘too big to fail,’ and where uninsured depositors and other creditors are protected by implicit government guarantees, the consequences can be quite serious. Indeed, the result may be a less stable and a less efficient financial system.
Prescient.