I've been a little imprecise in discussing the merits of shrinking financial institutions that are "too big to fail." Bank of America, for example, is the biggest bank in the country--$1.6 trillion in risk-weighted assets, according to the stress test results. But a lot of those assets are pretty standard commercial loans, which are relatively straight forward to analyze and wouldn't pose an especially big challenge for regulators were the institution on the verge of failure.
If, on the other hand, you're mostly concerned about the amount of complicated assets a bank has on its balance sheet--the ones that could be hard to liquidate if a company collapsed--the picture looks different. Take derivatives. BofA had a derivatives portfolio valued at $137 billion as of its first quarter filing. That's big. But, then, Morgan Stanley, which according to the stress test results has a balance sheet that's about one-fifth as large as BofA's, has a derivatives portfolio valued at more than half BofA's--$79.2 billion. So looking at the overall size of the balance sheet is a bit misleading as a proxy for complexity.
Long story short: If we're going to talk about limiting the size of financial institutions (as I have), we probably want to talk about limiting the size of their portfolio of complex instruments, not size per se.
Update: I'm adjusting my target here in response to good points from some commenters and Megan McArdle in our recent Bloggingheads appearance.