Why it's time to break up the 'too big to fail' banks

Even Shelia Blair, former FDIC chair back in February was calling for the break up of the big banks.  The buzz around the "too big to fail" debate has heated back up with former Citi CEO, Sandy Weill calling for the big banks to part ways, see [Breaking Up Is Hard to Do].

Blair contends as other things shrink in America such as houses, cars, and our diets (not sure about that), that the banks getting smaller would be a good things for not only government but also consumers.  We agree with Blair that smaller banks are probably better for our economy and the consumer, but she doesn't really lay out any concrete reasons why besides that it should be done.

Limits on leverage and increased competition are two reason that come to my mind first as to solid reasons for breaking up the banks.  By reducing leverage it should reduce risks.  Increasing competition would have lower costs for consumers or increase savings rates.