Mega-banks are frequently called a threat to financial stability, and breaking them up is pushed as a solution to our economic worries.

But breaking up the mega-banks to score a post-crisis pound of flesh could result in higher unemployment, increased credit costs and a transfer of risk from banks to lightly regulated shadow financial institutions, cautions one financial expert.

“The desire for revenge may be strong, but we should not lose sight of what should be our key goal: to make the global financial sector safer,” Mayra Rodriguez Valladares, managing principal at New York-based MRV Associates, which trains bank examiners and executives at financial firms, writes in an article for the American Banker.

Forbes Columnist: ‘Who the Hell Cleared This?’

The “too big to fail” banks have become a scapegoat for the financial crisis, yet all types of financial sector players, including securities firms, hedge funds, private equity firms, insurance companies and mutual and pension funds, can cause systemic risk, points out Valladares, a faculty member of The New York Institute of Finance.

Splitting up banks would prompt a large number of layoffs, she says, noting that most people working at banks are not bankers or traders and don’t get big bonuses. Instead, they’re analysts, back-office personnel, janitors and other small fry.

“Adding these people to the unemployment line neither helps the global economy nor punishes the true perpetrators of the crisis.”

Lower borrowing costs for mega-banks means lower borrowing costs for individuals and corporations, Valladares adds. If banks were to shrink, consumers and businesses would pay higher interest rates.

New banking regulations have not been finalized due to lobbyists and legislators blocking regulators. If those rules are completed, implemented and properly enforced, she explains, they could shrink financial risks or at least stop them from getting larger.

But bank critics should think through the impact of breaking up banks, she warns. For instance, after banks are split up, who would regulate the new entities?

“If securities firms were to end up out of the jurisdiction of bank supervisors,” she notes, “we would add more risk to the global financial sector by pushing the non-bank components to a practically unregulated shadow market.”

Mega-bank critics say that once investment houses are walled off from commercial banks and they do not receive government support, market discipline would encourage them to reduce risks.

“Where was market discipline in the mid-2000s?” she asks.

With an implicit government guarantee, mega-banks do not fear failure and can take excessive risks, argued Dallas Federal Reserve Bank President Richard W. Fisher and Harvey Rosenblum, the bank’s executive vice president and director of research, in an editorial in The Wall Street Journal.

It emboldens their sense of immunity from the law and lets them raise capital more cheaply than smaller banks can.

“This is patently unfair,” they argue.

Forbes Columnist: ‘Who the Hell Cleared This?’