Simon English: Much as we'd like to, we can't let banks fail

Outlook Lloyds Banking Group's chief executive, Antonio Horta-Osorio, stood before the assembled dignitaries of CBI Scotland last night to make a speech the organisers would insist on calling "keynote". Don't ask, no one knows what this means.

Anyway, Mr Horta-Osorio is a charming guy. Were he asked if his economic predictions are likely to be right, he might reply that, since he isn't an economist, he is at least in with a chance.

More than any other bank chief executive, he seems to mean it when he says that financial companies including his own need an overhaul.

Banks cannot continue lurching from crisis to crisis, he said. "The industry must change. We must recast the banking model… Furthermore, it needs to ensure that taxpayers' money is never again used to prop up a failing bank. They should be allowed to fail, like companies in any other sector; that's the essence of capitalism."

These are fine words, and we can stand on our feet and bang tables in approval if we like.

But even if we do what he advocates by splitting up the universal banks that include an investment bank and a high street arm into two – I'd prefer into eight, but that's another story – it isn't clear that banks will ever be anything other than a drain on the taxpayer. By nature, they are too big to fail. They are not like companies in any other sector. And we can't just let them go, as much as we might like to.

They will boom absurdly in the good times and crash disastrously in the bad ones.

No chief executive, even the estimable Mr Horta-Osorio, can stop this. So the only logical response is to stop bankers from imagining they are that brilliant in the first place. Their success is a function of how well the rest of us are doing. They can make things a lot worse. Or a bit better. And that's it.