So Long, Royal Bank of Scotland

| About: The Royal (RBS)

The Royal Bank of Scotland (NYSE:RBS) is on the chopping block. It will be split into a good bank and bad bank with hundreds of billions (of pounds) of toxic assets to be sold off for pennies on the dollar - and the vultures are lining up. It is Britain's biggest corporate loss and, more importantly, it is the corporate parent to my U.S. bank, which is apparently surviving in the good bank. The sell-off will be one of the biggest ever seen and will significantly reduce the bank's trillion pound balance sheet. This was a bank too big to fail.

One individual, Jay Levine, led the bank's charge into sub-prime mortgages in the U.S. and he left the bank in 2007 after earning 40 million pounds over three years. Hopefully someone will have the good sense to sue him for all that and more. There are plenty of legal theories you can think of and this type of foolishness needs to be rewarded with a host of lawsuits. Perhaps bankrupting those that led us to the brink with legitimate lawsuits premised on their negligence and malfeasance will warn others in the future not to tread there. If I were not in-house now, I would love to go after some of these less than stellar greedy individuals. It would be a good ride.

Meanwhile, however, what Britain is doing here is a road-map for the U.S. No bank is too big to fail. You can take banks down and remove them as competition for their healthier brethren. The sooner the better, as we cannot keep spending hundreds of billions on technically insolvent banks on life support.

The military has this concept known as triage and the U.S. government needs to take a page from that book. You need to look at the banks and prioritize. Those that are obviously going to die are last in line. They need to be orderly wound down, but otherwise deserve the least money and attention. Those that are critical but can survive deserve the most money and attention. And those only slightly wounded need to be patched up and put back into the field. Just my two cents on this.

Disclosures: None.