Just 12 huge banks hold almost 70 percent of the assets in the U.S. banking industry, he and Dallas Fed research director Harvey Rosenblum write in The Wall Street Journal.

The current system is “patently unfair,” they say. “It makes for an uneven playing field, tilted to the advantage of Wall Street against Main Street, and it places the financial system and the economy in constant jeopardy.” 

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

So what’s the solution?

First, provide deposit insurance and access to the Fed's discount window only to traditional commercial banks, not to the non-bank affiliates of bank holding companies or the parent companies themselves, Fisher and Rosenblum say.

“Second, customers, creditors and counterparties of all non-bank affiliates and the parent holding companies would sign a . . . disclosure acknowledging that there is no government guarantee backstopping their investment,” the two write. 

And finally, “the largest financial holding companies should be restructured so that every one of their corporate entities is subject to a speedy bankruptcy process, and in the case of banking entities themselves, that they be of a size that is ‘too small to save,’" Fisher and Rosenblum say.

Star banking analyst Dick Bove of Rafferty Capital Markets takes a much more benign view of the mega-banks. Indeed, he thinks their shares are set for a 14-year rally.

Banks have overcome a world of woe, he told Moneynews last month.

“Capital requirements have gone up, liquidity requirements have gone up, the industry has written off close to $800 billion worth of bad loans, there’s been increases in operating costs due to regulations,” Bove says.

“And yet this industry is sitting here earning the most money it’s ever earned in its history.” In 2012, the industry probably earned $145 billion net after tax, he says. “That’s very close to the highest amount it’s ever earned.”

And Bove expects the profit stream to continue.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible