Last week we were struck by a column written by George Will, a conservative columnist for the Washington Post, which called for the breakup of large banks. In his column, he argued that conservatives should lend support to Sherrod Brown, Ohio’s Democratic senior senator who is leading an effort to break up the biggest banks. The argument is that large banks are not any more efficient than smaller banks and that when a bank is too big to fail, the bank receives an unfair advantage in the form of lower borrowing costs. The article comes at a time when academics have also begun questioning how large banks are managed. In a book entitled “ The Bankers’ New Clothes: What is Wrong With Banking and What to Do About It,” Anti Admanti and Matin Hellwig present an academic case for significantly raising the capital requirements on banks. The authors argue that we can have a safer and healthier banking system without sacrificing any of the benefits of the system, and at essentially no cost to society. Recent speeches by Richard Fisher of the Federal Reserve Bank of Dallas argue for similar changes to the banking system. When reading the arguments of these politicians, academics, and financial regulators, we think that we may be at the beginning of a push to change the banking system. These changes could offer significant benefit for bondholders as the size and the risk of default for these large banks would be reduced. We will watch to see if the push to change banks gains traction, and feel that if it does, investors inbank bonds would be the beneficiaries.