The Chicago plan, as it became known, would split banks' two main functions: taking deposits and making loans.
Before the financial crisis, the fixed income division at Morgan Stanley, which was created by J. P. Morgan partners when Depression-era laws forced them to split banking from trading, was one of the firm's biggest moneymakers.
But after President Obama announced proposals last week for his own legislation to split banks up and a $90bn£56bnbn) levy on US banks, the pressure is on ministers to reveal whether they will follow the US approach.
REUTERS Proposal to Split Banks Gains Traction in Iceland | After suffering a dramatic financial collapse, Iceland is now on track to become "the first western nation since the global financial crisis hit five years ago to force banking conglomerates to split their business," Bloomberg News reports.
Geoghegan also again defended the size of HSBC which could be forced to break itself up if the coalition's independent commission on banking concludes that the way to reduce risk in the system is split banks along their investment banking and retail banking arms.
And eventually he brought into discredit the whole profession of analysts, with the result that Eliot Spitzer forced the brokerage houses to split banking from analysis altogether.
Two parties, one idea: split banks into two pieces.
Banking Reform Bill: Splitting banks into separate retail and investment arms.
There is still much to do in banking sector reform, to split investment banking from retail banking, reduce leverage in the financial sector and go after toxic products.
Sanford Weill, the financier who advocated for the repeal of the Glass-Steagall Act, now thinks the government should split investment banking from banking.
RBS chief executive Ross McEwan has said he is "delighted" following the decision not to split the bank into 'good' and 'bad' banks.
