Some of the country’s biggest financial institutions would still need public bailouts if they failed. But it’s not their size that’s the problem, it’s how they’re run.

Throughout the 20th century, the chief legislative option in the United States for confronting monopolistic firms has been to break them up into pieces with antitrust law. Presidential candidate Bernie Sanders now proposes this remedy for dealing with big banks, which appear no less “too big to fail” than they were when we bailed them out a few years ago.

This week, the Federal Reserve and the Federal Deposit Insurance Corp determined that five of the country’s biggest financial institutions still have no plan, in the event of insolvency, other than turning to the public for more bailouts. But size is only one of the moral hazards at play.

The real disaster of the 2008 crisis was not what happened to the banks – which shuffled their boardroom chairs a bit, paid back the government and kept on banking. The disaster was in what happened to millions of Americans, disproportionately people of color, who lost what little wealth they had to the banks’ predatory lending and perverse incentives. This led to cascading fallout around the world. Perhaps we should consider a new approach to antitrust policy, one that puts the would-be victims in charge.

It’s not entirely clear that the bigness of banks, per se, is the main problem. We live in a much more globalized world than that of the late 19th century, when the present logic of antitrust law was concocted. If you want to use the same piece of plastic to pay for hotel rooms in Shanghai and in Durban, you need financial institutions capable of reaching that far.

I loved my old neighborhood credit union, but it wasn’t much help when I moved out of the neighborhood; my new credit union is a bit bigger, and a lot more convenient. Even the call to reinstate the Glass-Steagall Act, and split deposits and lending from investing, could become harder to justify at a time when even individuals are making that distinction less and less.

Perhaps the problem, then, is not bigness so much as badness. I suspect that, when many of us talk about banks being “too big to fail”, what we really mean is “noxious institutions have come to dominate the economy so completely we can’t get rid of them”.

As Jamie Merchant pointed out at In These Times recently, the idea of breaking up big companies assumes that what we need is more healthy, ruthless, capitalist competition. That might make particular banks less dominant, but it won’t necessarily make them less noxious. The competition, in fact, could spur them toward greater recklessness.

Some institutions need to be big, but they can at least be accountable. So, consider an alternative: rather than breaking up the big banks, what if a new generation of public policy created a pathway toward more democratic ownership?

What if, for instance, a bank seeking new borrowers had to bring them on as co-owners, with a vote in the boardroom? They’d be less likely to hoodwink those borrowers with a predatory loan; too many bad loans, and the new co-owners could rise up and get the CEO fired. What if those votes were counted according to the number of people, not by their wealth? Then institutions would have to be more accountable to the common good, not just to a few top shareholders.

The ballooning financial industry might naturally shrink in the process, as institutions are forced to replace rampant speculation with responsible caution. Rather than buying up credit default swaps against its own customers, such banks might act more like my old credit union, which had a special office just for helping members avoid foreclosure and eviction.

It’s the difference between what Marjorie Kelly, in her lucid book Owning Our Future, refers to as “extractive” and “generative” ownership. One seeks only to maximize profits for shareholders who may or may not be directly affected by the enterprise; the other seeks to align the prosperity of an enterprise with the prosperity of those it serves.

In the last century, governments alternated between breaking up overgrown businesses into competitive pieces, or nationalizing them by handing them to state bureaucrats. This century, we should consider another approach: make them too good to fail. Make them accountable.

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