The main problem with the big banks and financial institutions is that they are too big. They have gotten into too any businesses. Their successful businesses provide necessary credit to the economy. Their other businesses are becoming a drag on their balance sheets. The trick is to break apart these businesses.This can be done rather simply.
All the banks need to do is find all their good assets. These assets should be put into new institutions, and broken off their parent institutions. Next, the parent institution can sell of these institutions, which will then be healthy. Once this was completed all the toxic assets would left in the parent institution. Now, the parent institution could stay alive if it could cover its obligations, or it could go bankrupt.
While some people might lose money, this would cleanse the system. The reorganization should be done so those who led healthy divisions take senior positions in the new spinoff companies. Meanwhile, we could get rid of the executives that took too much risk.