THE NEW YORK TIMES

Perspectives from expert contributors.

Jamie Dimon, the chief executive of JPMorgan Chase and a vociferous opponent of restrictions on reckless risk-taking by big banks, presided over large losses because of exactly such behavior in the company’s London office.

HSBC, which prided itself on a uniquely decentralized management model, was found to have violated – on a vast scale, over many years and in a uniquely decentralized manner – United States laws on money laundering and other actions; its head of global compliance resigned in July while on the witness stand during a Senate hearing.

And Barclays – which had bulked up on the strength of its capital-market activities – acknowledged that traders from that part of the company had conspired to rig Libor (the London Interbank Offered Rate), a crucial benchmark for global interest rates. In the ensuing public outcry, its top two executives were forced out.

And last week Sanford I. Weill, who amassed a vast fortune building Citigroup and pushing to dismantle the constraints on such megabanks’ activities, acknowledged that the entire exercise had been a mistake: “I’m suggesting that they be broken up so that the taxpayer will never be at risk, the depositors won’t be at risk, the leverage of the banks will be something reasonable.”

According to American Banker (whose coverage is available by subscription only), former top executives calling for the biggest banks to be broken up now include Philip J. Purcell, the former chief executive of Morgan Stanley; John Reed, the former chairman of Citigroup; and David Komansky, the former chief executive of Merrill Lynch.

Backed into a corner, representatives of these too-big-to-fail banks and their allies are forced to fall back on perpetuating three myths.

First, their critics are “populists” who do not understand banking or economics. But this is belied by the credentials of the people raising serious issues with how global megabanks currently operate.

American Banker highlights the critiques of Richard W. Fisher, president of the Federal Reserve Bank of Dallas and an experienced financial industry executive; Thomas Hoenig, former president of the Federal Reserve Bank of Kansas City and now the No. 2 official at the Federal Deposit Insurance Corporation; and Sheila C. Bair, former head of the F.D.I.C. and now the chairwoman of her own Systemic Risk Council (of which I am a member).

As I wrote here last week, Sarah Bloom Raskin, a governor of the Federal Reserve, has emerged as an important voice calling for rethinking crucial aspects of big banks, including why they should have implicit government backing for their securities and trading operations. Mervyn King, governor of the Bank of England, and Jon Huntsman, the former Republican presidential candidate, have also expressed articulate and well-informed proposals for making big banks less dangerous – primarily by forcing them to become smaller.

In this context, you should read Neil Barofsky’s new book, “Bailout,” a compelling critique of how the bailout was handled, including the treatment afforded to banks and the relative lack of effort that went into directly addressing problems with mortgages.

The pushback from the Obama administration is that Mr. Barofsky is some form of populist, in contrast to the supposedly responsible professionals of the Treasury Department (many of whom were previously or have subsequently become employees of large financial companies).

But a close reading of Mr. Barofsky’s narrative and analysis confirms what was evident to anyone who studied the reports he produced when he was special inspector general overseeing the Troubled Asset Relief Program. Mr. Barofsky, a distinguished law-enforcement professional, was given the job of preventing fraud and abuse in the Congressionally mandated bailout program, and his efforts to ensure that TARP was run effectively and more in line with taxpayer interests were opposed by senior Treasury officials at almost every turn.

The true issue is not populism versus responsible bankers. Big banks have become a dangerous special interest with powerful friends. It is the reformers who are responsible. Executives who run megabanks – and anyone who supports their continued existence – are the ones who have become reckless and damaging to society.

The second myth is that a “cost-benefit analysis” would show that the Dodd-Frank financial reforms are not worth pursuing. This is actually a clever – or perhaps devious – legal strategy that is being pursued in a low-profile but effective manner. Even well-informed people in Washington frequently have no idea how much damage this myth can still cause within the rule-writing process.

Fortunately, Dennis Kelleher and his colleagues at Better Markets are fighting hard against this myth. In a report released this week, Mr. Kelleher, Stephen Hall and Katelynn Bradley point out that the industry never wants to take into account the real costs of the crisis – millions of jobs lost, growth derailed, lives disrupted and enormous damage to our public finances.

We had a frank discussion of this report at the Peter G. Peterson Institute for International Economics on Monday, and I was struck by how many people have a hard time getting their minds around the scale of the damage wrought by large financial institutions that got out of control.

This relates also to the third myth – the assertion that financial reform will hurt our growth prospects. Again, as laid bare by Better Markets, it was reckless risk-taking at the heart of our financial system that led to the largest crisis since the 1930s; the damage will be with us for a long time.

Some decisive government actions helped to reduce the impact on the real economy, and we avoided a second Great Depression.

But, as Mr. Barofsky makes clear, there is almost nothing about these bailout measures that should make you feel good. Putting the big banks back on their feet, with essentially no conditions requiring real change, was a mistake – reinforcing the moral hazard and implicit government subsidies that are now at the heart of our financial system.

Today’s global megabanks are too big to manage. It is not “the market” in any sense that keeps these companies at their current scale; this is the largest and most dangerous government subsidy scheme on record. Such subsidies can only be ended by government action.

It is time to break up the largest banks. Make them small enough and simple enough to fail