Proponents of breaking up the banks argue that pure investment banks with no connection to the real economy would be treated differently. They would be excluded from deposit insurance schemes and also from implicit government guarantees. Consequently, if things went wrong, they would not be rescued by the government at the taxpayers’ expense – moral hazard would be reduced.
Moreover, banks would become less complex and thereby easier to resolve. These are – in a nutshell – the central arguments brought forward by the proponents of breaking up the banks.