Too big to fail equals too big to manage?

Here are a few choice questions put to George Osborne by members of the Parliamentary Commission on Banking Standards (25^th Feb 2013).
Q 4375 The Archbishop of Canterbury:  One bit of evidence that came out most  memorably from the former head of the Union Bank of Switzerland, but confirmed by  numerous others, is that you can have big simple banks or small complex ones, and you can usually manage them if you are competent. Big complex banks are not only too big to fail, but  they are too big to manage, yet this afternoon we have heard you continue to defend the idea  of a small group of absolutely colossal banks, including RBS, which even  in its reduced size  is still enormous and highly complex. Is that lack of will to break them up and reduce them to  a size that eliminated risk to the economy not simply a recipe for a repetition of the disasters we have seen in the past few years?   

Osborne didn’t have a brilliant answer to that.
Q  4376  The Archbishop of Canterbury:   The evidence Andy Haldane showed us is   that there  ere are no economies of scale at this size  —  in fact, quite the reverse. Foreign banks are  not our problem; they are the problem of the regulator where they are located. What about the British banks? The evidence was not that they are difficult to manage when they are big and   complex, but that they are impossible to manage when they are big and complex.   


Next, some questions by Nigel Lawson (the UK’s former finance minister) on the subject of the 3% leverage ratio being contemplated by Osborne.
Q 4327 Lord Lawson of Blaby: May I just continue a little bit on this leverage ratio? It  is all very well to look at Europe, but there are only two world - class banking centres: this  country and the United States, particularly New York. You are aware, aren’t you, that the  Americans are moving towards a 5% leverage ratio? Do you think that that is going to be very damaging to them?
Mr Osborne: I do not have in front of me the evidence of the impact on their industry.
Q 4328 Lord Lawson of Blaby: But don’t you think that they have thought hard about  it? Have you had discussions with your American opposite number on this point? They are not thinking of going to 4%, they are planning to go to 5%.
Mr Osborne: No, I have not had this specific discussion with either my new opposite  number or my previous opposite number on that point. Often our discussion with the United  States is around making sure that the Basel III agreement is properly implemented.
Q 4329 Lord Lawson of Blaby: May I suggest that it might be sensible to reflect  further on this in the light of what the Americans are doing and of the reasons that led them to  reach this conclusion? On another aspect, you absolutely correctly pointed out right at the beginning, in your  initial answer to the Chairman’s first question.  
Mr Osborne: We discussed this when I was last before the Commission. I feel that we  have come up with a solution that reflects the structure of our industry — with the ring - fencing  proposals.
Q 4330 Lord Lawson of Blaby:  With respect, that is not answering the question….