Over the past few days, I’ve spent way too much time inside planes and rental cars. And during my travels, I’ve been thinking about one idiom, the one we keep hearing when Washington discusses Wall Street: “too big to fail.” Do we know what it means? Can songwriters explain the essence?

Does TBTF have anything to do with WTF?

Too big to fail is a like a fight song for politicians. The expression conjures up dark images:

• Massive financial bets;
• Threats to the world’s economic order; or
• Goldfinger-like bankers seizing control of our lives.

These four words have become a tool for harnessing populist furor. It’s like everybody is jumping on the TBTF bandwagon. Let’s split up our financial organizations. We don’t want them jeopardizing us again, right?

But how tough is it to break up the banks?

Hint: it’s not easy. Here’s how The Economist describes the challenge of downsizing, changing banks from “too big to fail” to “small enough nobody’s afraid.”

The smallest firm subject to the Fed’s stress tests in May had risk-adjusted assets of about $100 billion. If this were the minimum size of a systemically important firm, then America’s four big banks would need to be split into 48 separate companies to be small enough to fail.

Yikes. The complexity—turning four banks into forty eight—strikes me as mind-numbing. A few missteps, and we’re toast. I don’t like Wall Street gorging on a bonus trough at the expense of taxpayers. But I’m not embracing Washington’s reforms until I see detailed proposals.

Here’s another way to think about “too big to fail.” Bank of America generated revenues of $124 billion during 2008. That’s bigger than New Zealand’s Gross National Product of $107 billion the same year. So would it be more complicated to split up Bank of America than our friends Down Under? No wisecracks from my buddies in Australia.

I got your back, New Zealand.

This comparison brings up an interesting point. The Gross State Product of Washington DC was $93 billion in 2006. That’s almost double 2009 revenues of $51 billion at Goldman Sachs. It’s more than three times Morgan Stanley’s 2009 revenues of $29 billion.

I’m beginning to think our government is too big to fail.

Norb Vonnegut