TARP, the infamous Troubled Assets Relief Program that bailed out Wall Street in 2008, is finally over. The Treasury Department recently announced it will soon be completing the sale of the remaining shares it owns of the banks and of General Motors.
But it's not really over. The biggest Wall Street banks are now far bigger than they were four years ago, when they were considered too big to fail. The five largest have almost 44 percent of all U.S. bank deposits. That's up from 37 percent in 2007, just before the crash. A decade ago they had just 28 percent.
The biggest banks keep getting bigger because they can borrow more cheaply than smaller banks.
That's because investors believe the government will bail them out if they get into trouble, rather than force them into a form of bankruptcy (as the new Dodd-Frank law makes possible). This belief itself -- a virtual federal guarantee -- is worth billions to the big banks. It makes dealing with them less risky.
And the belief is correct. No president will allow a $2 trillion bank to go under. That would threaten the whole economy.
To make matters worse, with bigness comes more political clout. The biggest banks on Wall Street have already eviscerated parts of the Dodd-Frank law they don't like, including many of the limits on trading derivatives. (Derivatives are essentially bets on bets about the prices of future assets.) That means they'll be back to making big, risky bets.
So now that TARP is over, shouldn't we make absolutely sure we don't need another Wall Street bailout? No bank ever again should be too big to fail.
That's why it's necessary to limit their size and break up the biggest. There's no alternative.
Impossible, you say? The banks are so big and powerful they'll prevent any attempt to break them up.
Yet there's reason to think Washington may be ready and willing. A few months ago, Dan Tarullo, the governor of the Federal Reserve Board who specializes in bank regulation, proposed capping the size of the banks' balance sheets at a fixed percentage of the U.S. economy.
"This approach has the advantage of tying the limitation on growth of financial firms to the growth of the national economy and its capacity to absorb losses," said Tarullo, "as well as to the extent of a firm's dependence on funding from sources other than the stable base of deposits."
Meanwhile, the Fed has put the big banks on notice it will no longer allow them to buy up other banks.
Federal Deposit Insurance Corporation board member Thomas Hoenig, an independent chosen by Republicans for his post, is also pushing a plan to break up the biggest banks.
The move to break up the big banks is gaining support in some unlikely quarters. Even former titans of Wall Street are urging it.
Sandy Weill, who created Citigroup and thereby the model of mega-banking, is also proposing that the biggest banks be broken up. "I think that the earlier model was right for that time ... I don't think it's right anymore," he told CNBC.
Mr. Weill said he thinks banks will be more profitable once broken up and that the markets would function better.
Mr. Weill was one of the champions of bank deregulation. Yet when Citigroup got into trouble, it required $45 billion in TARP funding.
The new Congress may be willing to pull the plug on the biggest banks. Despite the banks' political clout, members on both sides of the aisle are indicating support for limiting their size.
The new chairman of the House Financial Services Committee, Texas Republican Jeb Hensarling, has been a strong ally of small banks in their push to rein in their bigger rivals. It's not irrelevant that the Dallas branch of the Federal Reserve Board, in Hensarling's home district, has also proposed breaking up the biggest banks.
Over in the Senate, Sherrod Brown of Ohio is a strong advocate for breaking up the big banks. Mr. Brown is now on the Senate Finance Committee. And Elizabeth Warren, scourge of Wall Street, will sit on the Senate Banking Committee.
In other words, the timing is right. The oven is ready. All we need is another multibillion-dollar banking loss due to bad bets -- like JP Morgan Chase's $6 billion loss last year -- and the biggest banks are cooked.
Robert Reich, former U.S. Secretary of Labor, is professor of public policy at the University of California at Berkeley and the author of "Aftershock: The Next Economy and America's Future." He blogs at www.robertreich.org.