"Reinstating Glass-Steagall, then, would not prevent failures, and would not remove incentive of governments to intervene when failures happen. More important is making sure that banks fund themselves with enough capital from shareholders, rather than with debt. [..] Capital absorbs losses, because shares can fall in value; debt does not. More capital reduces the probability of bank failures. That, in turn, reduces the incentive for banks to grow; as the probability of failure shrinks, the advantage of being big—that the government will bail you out if you fail—diminishes too. That is important: some think the only reason banks get big in the first place is to exploit the government’s implicit guarantee. More capital is also a simple policy that makes banks more resilient to risks of any kind, rather than micro-managing what risks they can take. Glass-Steagall, in comparison, is a distraction."