Interesting article. I read it this morning too.
One person who has a surprising take on the matter is Jamie Dimon, CEO at JPMorgan. I tend to agree with it.
The ultimate problem is that the risk banks take is not aligned with the reward they get. An example would be prop trading with federally insured deposits. Prop trading is fine, so long as the bank endures all of the potential downside. However, with federally insured deposits, it can max out the risk knowing it won't have to foot the bill. The aim of the Volker rule is to solve this problem. A better approach would be to let banks take all the risk they like, but with their own money, by separating the capital received via deposits and the capital of the bank. Having reporting controls that make sure it is very easy to identify who evaluated, approved and took the risks is also important. When people know they're on the spot, they have a tendency to behave.
Ultimately, Dimon insists that large banks need to be allowed to fail - large institutions more precisely. It is vital to the health of the system, because if we don't, then everyone foots the bill. If we do, then the losses are limited to the shareholders, and nobody forced them to invest. With respect to banks, Dimon asserts that each bank should have a "living will" of sorts that explains how to dismantle the various legal entities without damaging the economy or costing the taxpayers (JPM has such a will). Further to that, Dimon asserts that all registered investment banks bear the costs that do overflow from the bankruptcy of one bank via a communal fund. That way, each bank has an incentive to conduct itself within reasonable risk parameters when dealing with other banks.
As for Goldman Sachs, Lloyd Blankfein is scum and should go to jail.