Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The "too big to fail" phrase came from an analysis of the American response to the collapse of Lehman Brothers. It became the conversation point, in that people believed that banks were too big to fail. The American authorities then allowed Lehman Brothers to fail. The phrase has no legal status and no bank in Europe is too big to fail. What is being done here is so that banks can be resolved less expensively. If there is a residual piece that must be bailed out by the taxpayers of Europe rather than the taxpayers of an individual country, a division is being made in terms of larger banks between the activities in which they indulge for their profitability and their functions as retails banks in supplying to individuals and small to medium-sized enterprises, SMEs, the credit streams that countries need to grow economically.

A version of this approach arose several years ago when we were discussing the first run of the banking crisis, with investment banking separate from retail banking. The purpose of the current approach is to reduce the piece that must be resolved subsequently.