Big banks must be allowed to fail. Failing includes being taken over by the government, the board members and senior management fired and the shareholders wiped out. The "new bank" then needs to be repackaged, probably into many small pieces, and then sold to the private sector.
Further, "to big to fail" should not be allowed in the first place. The big banks, who are members of the oligopoly that controls the banking industry, must be broken up using existing anti-trust laws. We no longer have a free market in the banking industry serving the consumer. We have an industry serving the oligopoly that controls it.
President Obama needs to find the gonads to do what is right. If not, we need to find someone with bigger ones.