THE recent crisis revealed the significant risks posed by large, complex, and interconnected banks of all types and the fault lines in their regulation and oversight. Over the past two decades, financial institutions in advanced economies expanded significantly and increased their global outreach. Many moved away from the traditional banking model—taking deposits and lending at the local level—to become large and complex financial institutions (LCFIs). These global financial titans underwrite bonds and stocks, write and sell credit and other derivatives contracts, and engage in securitization and proprietary trading within and across borders. When they fail, as did the Lehman Brothers investment bank in 2008, their downfall can lead to plummeting asset prices and turmoil in financial markets and threaten the whole financial system.